… catches up with its vice-rector. He has just resigned. This leaves Dragas with her Dragas exposed.
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And, as Teresa Sullivan anticipated, the Wulf is now at the door.
On Tuesday, engineering professor William Wulf sent a stern letter of resignation to the new interim president. It was unclear if Wulf had another job lined up. Wulf’s resignation was considered significant because he is one of fewer than 20 “university professors” among a faculty of 2,200, an honor bestowed on the school’s most accomplished educators.
“I do not wish to be associated with an institution being as badly run as the current UVa,” he wrote. “A BOV that so poorly understands UVa, and academic culture more generally, is going to make a lot more dumb decisions, so the University is headed for disaster, and I don’t want to be any part of that. And, frankly, I think you should be ashamed to be party to this debacle!”
Surprisingly well-written for an engineering type. Scathing Online Schoolmarm would have dumped the final exclamation mark.
An education columnist at the Washington Post pinpoints the exact location where Rector Dragas has dragged U Va’s sorry ass.
With its new managerial elite, and its expensive public relations firm for managing the crisis its own trustees have brought upon it, U Va is now digging a yet deeper grave. Why?
Because professors really don’t like being condescended to and massaged into compliance with benevolent managerial states. They know it when this pacifying technique is being used on them, and it makes them mad.
A school like Virginia has gone out of its way to hire many professors who are independent thinkers and who are committed to seeing the world clearly. These are not the sort of people who watch Goldman Sachs pr spots and say Wow. I thought Goldman Sachs was a vampire squid but it turns out it’s all about teaching inner city kids! They’re not the sort of people who watch BP pr spots and say Hey, could have fooled me. I thought BP was an oil company whose arrant disregard destroyed lives and landscapes. Turns out it’s an environmentalist outfit! They’re not the sort of people who say This Hill and Knowlton video of Helen Dragas wiping away a tear and talking about her anguish really puts the whole president-dumping thing in perspective for me.
The more of that shit Virginia does (and they don’t know to do anything else), the madder the university community is going to get.
… begins, with its hastily appointed new president, Zeithaml (the name translates roughly into Time + Castrated Ram).
In the tradition of Bobby Lowder at Auburn, Jeffrey Wiesenfeld at CUNY, and Gene Powell at the University of Texas, Helen Dragas, head of Virginia’s trustees, seems to be a paternalistic anti-intellectual with power issues. These people occasionally arise in positions of authority at universities, and it is always a catastrophe.
If you want to anticipate the likely plot trajectory of this catastrophe, go back to the history of American University’s board of trustees when the now-notorious Benjamin Ladner was AU’s president. That long ugly expensive story featured clueless rich trustees pumping Ladner full of cash and privileges (keep in mind that even vast academic salaries look pathetic to real estate moguls and hedgies) until his profligacy became a national scandal. Getting out of the scandal took ages and did terrible damage to an already scandal-scarred university. Conflicts among the trustees were open, protracted and farcical, with this one and then that one leaving in a huff, etc. Expect a similar soap opera at Virginia.
Teresa Sullivan, suddenly ex-president of the University of Virginia, speaks to the trustees. Excerpts:
Sweeping action may be gratifying and may create the aura of strong leadership, but its unintended consequences may lead to costs that are too high to bear.
… Corporate-style, top-down leadership does not work in a great university. Sustained change with buy-in does work.
… [D]eans and provosts at every peer institution are setting aside funds now to raid the University of Virginia next year given the current turmoil on our campus.
… A dramatic top-down reallocation in our general fund, simply to show that we are “changing,” or that we are not “incremental,” seems to me fiscally imprudent, highly alarming to faculty, and unfair to students who expect to get a broadly inclusive education here. I have chosen a lower-risk and more conservative strategy, because I am accountable to the taxpayers and the tuition payers.
If we were to embark on a course of deep top-down cuts, there would also be difficult questions regarding what to cut. A university that does not teach the full range of arts and sciences will no longer be a university. Certainly it will no longer be respected as such by its former peers.
… Fundraising takes time. A new President first has to meet donors and establish trust and rapport. Instability is as alarming to donors as it is to faculty and in the last few days you are already seeing the impact.
… faculty senate. They just took a close to unanimous vote of no confidence in the university’s trustees.
The University of Virginia trustees who last week, after her being on the job for only two years, decided to dump the president and not tell anyone why.
Various faculty and high-level administrators are talking about leaving.
It looks as though Virginia has decided to model itself on Shorter University, much of whose faculty has left because they refuse to sign the following document:
I reject as acceptable all sexual activity not in agreement with the Bible, including, but not limited to, premarital sex, adultery, and homosexuality.
The Virginia statement, I guess, would go something like this:
I reject as acceptable all organizational activity not in agreement with strategic dianetics, including, but not limited to, foundational humanistic course offerings, faculty participation in university decisions, and communication with the university community.
I’m sorry. Make that strategic dynamism.
… begins to assume a notoriety uncomfortably similar to “current Goldman Sachs partner.” One feels a twinge of concern for Barnard College’s president, the latest academic to fall for the hundreds of thousands of do-nothing dollars in personal compensation the place is going to give her just for shedding some academic respectability on the firm’s, uh, activities. (What do you get for going beyond sitting on your ass? What do you get for reading a speech someone wrote for you? “Goldman Sachs paid [ex-Harvard president Lawrence Summers] $135,000 for one speech.” Something for Barnard’s president to shoot for.)
I mean, it’s awkward. Here Barnard’s prez sits on the Goldman board of trustees, but the head of Goldman Sachs has to cancel a talk he planned to give at her school because
Students at Columbia University, across the street from Barnard, had organized a week-long protest against Blankfein called “School the Squid,” which included discussions about corporate greed and power abuse, the student-run Columbia Daily Spectator reported on its website today.
Goldman Sachs, which was the most profitable securities firm in Wall Street history before it converted to a bank in 2008 after the collapse of smaller rival Lehman Brothers Holdings Inc., set a pay record in 2007 when it awarded Blankfein a $67.9 million bonus.
A 2009 article by Matt Taibbi in Rolling Stone magazine labeled the company “a great vampire squid wrapped around the face of humanity.”
Ruth Simmons, another Goldman trustee, got out while the getting was good; but Barnard’s president has just jumped right in… And why not? As Rajat Gupta and Peter Kiernan can tell her, being a former Goldman Sachs partner is pretty much as bad as being a current Goldman Sachs partner. It seems to follow you around.
Barnard College. Judge us by the company we keep.
… set the pace here** – and as for bohemoth endowment losses based on interest-rate swaps, no one will ever outpace Harvard’s Larry Summers .
But Dartmouth is certainly doing its bit, with “the investment of $550 million in interest-rate swaps with now-defunct Lehman Brothers that [a faculty and alumni group] says are now worth $250 million.”
A lot of people at Dartmouth are unhappy about university trustees who are also money managers, and they’ve written a letter about it to the governor and attorney general of New Hampshire.
The letter calls for an investigation into money managers who have invested the Hanover, N.H.-based college’s assets while members of the investment committee… The letter accuses the money managers of “enriching themselves” through private equity, venture capital and hedge fund investments made by the endowment.
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In an official letter distributed to alumni, students, faculty, and administration, Yeshiva University President Richard Joel stated that Merkin, who was Chairman of the University Investment Committee, managing its endowment of almost $1.8 billion (as of about 2 years ago), had invested about $112 million in his own hedge fund, Ascot Partners, which was almost solely invested with the [Bernard] Madoff fund. In actuality, it was an initial investment of $14 million that became falsely inflated to $112 million over time. As such, Merkin collected an initial fee of one percent and later 1.5 percent, standard for all of Yeshiva’s money managers on whose Board of Trustees he sat. He collected over $2 million in fees, almost $1 million for Ascot alone. In fourteen years, the fund grew 9 percent a year, even after subtracting losses for Madoff and expenses. He made at least $10 million from Yeshiva over his tenure. Although Joel implicitly acknowledged that the university’s charter lacked a conflict of interest restriction on the management of school funds, Merkin resigned from all of his positions at Yeshiva that day.
With these mealy-mouthed words, the chancellor of UC Irvine rejects a petition from the student government calling for the removal of a trustee who acts as honorary consul to the civilian-massacring government of Syria.
But no – I mean, we’ve seen with our own eyes that even though the guy is a regime official who hasn’t said a word about the blood on the streets back home, he’s a good guy! And after all, he’s not a paid agent of the regime! He’s a volunteer agent.
See the reasoning, kiddies? All better… all better…
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The local NPR station has a vastly reassuring statement from the guy.
“Although Dr. Chehabi agreed to meet with NPR, he refused to be recorded. He won’t discuss the Assad regime, but says personally, he opposes the shooting of unarmed civilians.”
Cool! Me too.
When UD was a tyke, her mother, who bred dogs, took her to many dog shows up and down the east coast. Once, while her mother was gazing at handlers running English Cocker Spaniels round and round and round, UD wandered away and got lost. (What’s the definition of trauma if you grew up in Bethesda, Maryland? Getting lost at a dog show.)
The one thing UD took away from all those shows was a phrase she heard over and over again at them: CLEAN-UP CREW, RING ONE. Or two or whatever. UD seems to have been impressed that a group of people existed whose function was to rush about cleaning up dog shit.
With the soon to be infamous “muppet” letter published in today’s New York Times, corporate clean-up crews are pressing pooper scoopers into service all over the country. Let’s see if we can help them. Here’s the mess in the ring. Here’s what Brown University’s president, until very recently a highly paid member of the Goldman Sachs board of trustees, was in with.
Today is my last day at Goldman Sachs. After almost 12 years at the firm — first as a summer intern while at Stanford, then in New York for 10 years, and now in London — I believe I have worked here long enough to understand the trajectory of its culture, its people and its identity. And I can honestly say that the environment now is as toxic and destructive as I have ever seen it.
To put the problem in the simplest terms, the interests of the client continue to be sidelined in the way the firm operates and thinks about making money. Goldman Sachs is one of the world’s largest and most important investment banks and it is too integral to global finance to continue to act this way. The firm has veered so far from the place I joined right out of college that I can no longer in good conscience say that I identify with what it stands for.
It might sound surprising to a skeptical public, but culture was always a vital part of Goldman Sachs’s success. It revolved around teamwork, integrity, a spirit of humility, and always doing right by our clients. The culture was the secret sauce that made this place great and allowed us to earn our clients’ trust for 143 years. It wasn’t just about making money; this alone will not sustain a firm for so long. It had something to do with pride and belief in the organization. I am sad to say that I look around today and see virtually no trace of the culture that made me love working for this firm for many years. I no longer have the pride, or the belief.
But this was not always the case. For more than a decade I recruited and mentored candidates through our grueling interview process. I was selected as one of 10 people (out of a firm of more than 30,000) to appear on our recruiting video, which is played on every college campus we visit around the world. In 2006 I managed the summer intern program in sales and trading in New York for the 80 college students who made the cut, out of the thousands who applied.
I knew it was time to leave when I realized I could no longer look students in the eye and tell them what a great place this was to work.
When the history books are written about Goldman Sachs, they may reflect that the current chief executive officer, Lloyd C. Blankfein, and the president, Gary D. Cohn, lost hold of the firm’s culture on their watch. I truly believe that this decline in the firm’s moral fiber represents the single most serious threat to its long-run survival.
Over the course of my career I have had the privilege of advising two of the largest hedge funds on the planet, five of the largest asset managers in the United States, and three of the most prominent sovereign wealth funds in the Middle East and Asia. My clients have a total asset base of more than a trillion dollars. I have always taken a lot of pride in advising my clients to do what I believe is right for them, even if it means less money for the firm. This view is becoming increasingly unpopular at Goldman Sachs. Another sign that it was time to leave.
How did we get here? The firm changed the way it thought about leadership. Leadership used to be about ideas, setting an example and doing the right thing. Today, if you make enough money for the firm (and are not currently an ax murderer) you will be promoted into a position of influence. [Scathing Online Schoolmarm says: Nice bit of humor there.]
What are three quick ways to become a leader? a) Execute on the firm’s “axes,” which is Goldman-speak for persuading your clients to invest in the stocks or other products that we are trying to get rid of because they are not seen as having a lot of potential profit. b) “Hunt Elephants.” In English: get your clients — some of whom are sophisticated, and some of whom aren’t — to trade whatever will bring the biggest profit to Goldman. Call me old-fashioned, but I don’t like selling my clients a product that is wrong for them. c) Find yourself sitting in a seat where your job is to trade any illiquid, opaque product with a three-letter acronym.
Today, many of these leaders display a Goldman Sachs culture quotient of exactly zero percent. I attend derivatives sales meetings where not one single minute is spent asking questions about how we can help clients. It’s purely about how we can make the most possible money off of them. If you were an alien from Mars and sat in on one of these meetings, you would believe that a client’s success or progress was not part of the thought process at all.
It makes me ill how callously people talk about ripping their clients off. Over the last 12 months I have seen five different managing directors refer to their own clients as “muppets,” sometimes over internal e-mail. Even after the S.E.C., Fabulous Fab, Abacus, God’s work, Carl Levin, Vampire Squids? No humility? I mean, come on. Integrity? It is eroding. I don’t know of any illegal behavior, but will people push the envelope and pitch lucrative and complicated products to clients even if they are not the simplest investments or the ones most directly aligned with the client’s goals? Absolutely. Every day, in fact.
It astounds me how little senior management gets a basic truth: If clients don’t trust you they will eventually stop doing business with you. It doesn’t matter how smart you are.
These days, the most common question I get from junior analysts about derivatives is, “How much money did we make off the client?” It bothers me every time I hear it, because it is a clear reflection of what they are observing from their leaders about the way they should behave. Now project 10 years into the future: You don’t have to be a rocket scientist to figure out that the junior analyst sitting quietly in the corner of the room hearing about “muppets,” “ripping eyeballs out” and “getting paid” doesn’t exactly turn into a model citizen.
When I was a first-year analyst I didn’t know where the bathroom was, or how to tie my shoelaces. I was taught to be concerned with learning the ropes, finding out what a derivative was, understanding finance, getting to know our clients and what motivated them, learning how they defined success and what we could do to help them get there.
My proudest moments in life — getting a full scholarship to go from South Africa to Stanford University, being selected as a Rhodes Scholar national finalist, winning a bronze medal for table tennis at the Maccabiah Games in Israel, known as the Jewish Olympics — have all come through hard work, with no shortcuts. Goldman Sachs today has become too much about shortcuts and not enough about achievement. It just doesn’t feel right to me anymore. [He’d actually have done better not to list the particular accomplishments – it edges toward boasting, and humility is the idea here.] [Update: See? A lot of people are having fun with this.]
I hope this can be a wake-up call to the board of directors. Make the client the focal point of your business again. Without clients you will not make money. In fact, you will not exist. Weed out the morally bankrupt people, no matter how much money they make for the firm. And get the culture right again, so people want to work here for the right reasons. People who care only about making money will not sustain this firm — or the trust of its clients — for very much longer.
Hokay, so what’s corporate clean-up going to do?
Oh, you know.
So do I.
First, it’s going to impugn the guy. Secret resentments; he was close to retirement; he was increasingly irrelevant and he knew it so he thought he’d take a last potshot. (Damn! Traitors everywhere.)
And – if that’s how he feels, why did he stay so long? Cashing in baby, cashing in, just like everyone else! Do you know how much money he made last year? Twenty, fifty mil, maybe? If he’s so pure, we await his return of the cash…
Stuff like that.
And anyway! Muppets is a term of endearment.
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Notice that one thing his conscience couldn’t take anymore was looking college students in the eye and telling them Goldman was a good place to work when he knew they weren’t exactly going to be turned into model citizens.
Well, he can stop worrying about that. These students come from universities whose boards of trustees and presidents have been in bed with Goldman and Goldman veterans for a long time. So…
Muppets of Barnard College! I give you your president, Debora Spar, Goldman Sachs board of trustees! Goldman will be giving her around $500,000 a year to do … pretty much what Brown University’s Ruth Simmons did. Pretty much nothing. Pretty much rubber stamp hundreds of millions in compensation each year for Goldman executives.
See, she’s a muppet too.
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Update: Live-blogging the Muppet Show:
TO SAVE GOLDMAN SACHS, LLOYD BLANKFEIN MUST GO
shouts a headline that just appeared at Forbes.
B-b-but…! What happens to Barnard College in that case? The reason its president got on the Goldman board is that Blankfein’s wife – until recently herself a member of Barnard’s board – seems to have put her there. This is from 2011:
Chairman and Chief Executive Officer Lloyd C. Blankfein’s wife, Laura, is a Barnard College alumna and is listed on the school’s website as a member of the board of trustees. She has resigned that post, Stephen Cohen, a spokesman for Goldman Sachs, said today. The Lloyd & Laura Blankfein Foundation donated $50,000 to Barnard College in fiscal 2010, which ended Jan. 31, 2010, and $25,000 in the previous year, according to the nonprofit’s federal tax filings.
You put me on the Barnard BOT; I put you on the Goldman BOT. And look at those numbers, will you? Blankfein’s been making around fifty million dollars in compensation each year for many years. Can you believe he and his wife were willing to part with – let’s do the math – $75,000 for Barnard? Who said greed? Shut up about greed!
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Favorite headline so far:
Goldman Sachs Exec Suddenly Realizes His Company Is Evil, Quits in NYT Op-Ed
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G is for Goldman, it’s good enough for me!
Be proud, Barnard muppets, of your very own Cookie Monster!
The real muppets, in this story, are Goldman’s board members, who have never had any real control over how the company is run. And, frankly, never will. The most remunerative skill, at Goldman, is the ability to flatter someone into believing that they’re incredibly important and clever and sophisticated, even as you’re getting that person to do exactly what’s in your own best interest. No one rises to lead Goldman Sachs who doesn’t have that skill. And you can be sure that Lloyd Blankfein uses it on the board every time he meets with them.
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We promise it’ll never happen again: Andy Borowitz writes a Lloyd Blankfein response.
At Goldman, we pride ourselves on our ability to scour the world’s universities and business schools for the finest sociopaths money will buy. Once in our internship program, these youths are subjected to rigorous evaluations to root out even the slightest evidence of a soul. But, as the case of Mr. Smith shows, even the most time-tested system for detecting shreds of humanity can blow a gasket now and then. For that, we can only offer you our deepest apology and the reassurance that one good apple won’t spoil the whole bunch.