Table Of ContentBUSINESS $16.95 U.S. NOMI “A GREAT CRIME STORY IN WHICH THE CULPRITS
GET AWAY WITH LARCENY ON AN EPIC SCALE.”
PRINS
—WILLIAM GREIDER
NAMED ONE OF THE BEST BOOKS OF 2004 BY
THE ECONOMIST, BARRON’S, LIBRARY JOURNAL,
OTHER
AND THE PROGRESSIVE
O
CRITICAL, INDEPENDENT VOICES SELDOM EMERGE FROM THE
T
CITADELS OF INTERNATIONAL FINANCE. THAT’S WHAT MAKES
NOMI PRINS UNIQUE. DURING OVER A DECADE AT SKYSCRAPING H
INVESTMENT BANKS LIKE GOLDMAN SACHS, BEAR STEARNS, AND
E
LEHMAN BROTHERS, PRINS NEVER LOST HER ABILITY TO SEE
THE BROADER PICTURE. SHE WALKED AWAY FROM THE GAME OUT PEOPLE'S
R
OF DISGUST WITH THE BURGEONING CORPORATE CORRUPTION.
IN THIS ACCLAIMED EXPOSÉ, PRINS PROVIDES FASCINATING
FIRSTHAND DETAILS OF DAY-TO-DAY LIFE IN THE FINANCIAL
LEVIATHANS, WITH ALL OF ITS RICH ABSURDITIES. SHE P
DEMONSTRATES HOW THE MUCH-PUBLICIZED FRAUD OF RECENT
E
YEARS RESULTED FROM DEREGULATION THAT TRASHED THE
RULES OF RESPONSIBLE CORPORATE BEHAVIOR AND NOT SIMPLY
O
MONEY
THE UNBRIDLED GREED OF A SELECT FEW. WORSE YET, AS A
NEW PREFACE MAKES CLEAR, EVERYTHING REMAINS IN PLACE P
FOR A REPEAT PERFORMANCE.
L
“THE MOST REVEALING DESCRIPTION YET OF WHAT IT IS E
LIKE TO WORK FOR THE MIGHTY GOLDMAN SACHS.”
—THE ECONOMIST ’
“A GIDDY ROMP THROUGH THE OLD-BOY NETWORKS S THE CORPORATE MUGGING OF AMERICA
AND UNENDING POWER PLAYS OF WALL STREET,
CORPORATE AMERICA, AND CAPITOL HILL.”
—BARRON’S M
Before becoming a journalist, Nomi Prins held senior positions at O NOMI
Goldman Sachs, Bear Stearns, and Lehman Brothers. She has written
for the New York Times, Newsday, Fortune, and The Guardian and N
appeared on numerous international media programs. She is a senior
fellow with public policy center De-mos and lives in New York City. E
Y
ISBN-13: 978-1-59558-063-4
ISBN-10: 1-59558-063-8 PRINS
with a new preface
www.thenewpress.com
by the author
Cover photograph by Richard Sylvarnes
Cover design by Alan Hill
THE NEW PRESS THE NEW PRESS
OTHER PEOPLE’S MONEY
Other People’s Money
The Corporate Mugging ofAmerica
Nomi Prins
© 2004 by Nomi Prins
Preface to the paperback edition © 2006 by Nomi Prins
All rights reserved.
No part of this book may be reproduced, in any form,
without written permission from the publisher.
Requests for permission to reproduce selections from this book should be mailed to:
Permissions Department, The New Press, 38 Greene Street, New York, NY 10013
Published in the United States by The New Press, New York, 2006
Distributed by W. W. Norton & Company, Inc., New York
library of congress cataloging-in-publication data
Prins, Nomi.
Other people’s money : the corporate mugging of America / Nomi Prins.
p. cm.
Includes bibliographical references and index.
ISBN-13 978-1-56584-836-8 (hc.) 978-1-59558-063-4 (pbk)
ISBN-10 1-56584-836-5 (hc.) 1-59558-063-8 (pbk)
1. Investment banking—Moral and ethical aspects—United States. 2. Corporations—Moral and ethical
aspects—United States. 3. Corporations—Corrupt practices—United States. 4. Stock Market Bubble,
1995–2000. 5. Capital market—United States—History—20th century. I. Title.
HG4930.5.P75 2004
330.973'0929—dc22 2004049861
The New Press was established in 1990 as a not-for-profit alternative
to the large, commercial publishing houses currently dominating
the book publishing industry. The New Press operates in the public interest
rather than for private gain, and is committed to publishing,
in innovative ways, works of educational, cultural, and community value
that are often deemed insufficiently profitable.
www.thenewpress.com
Composition by Westchester Book Composition
Printed in the United States of America
2 4 6 8 10 9 7 5 3 1
for my family
Contents
Preface to the Paperback Edition ix
Preface xv
Acknowledgments xix
Prologue: Midsummer Night’s Dream xxi
Introduction 1
1. The Bank Wars 27
2. Scratching Backs: Banks and Corporations 71
3. Deregulation and Creating Instability 113
4. Enron, Energy, and Entropy 143
5. Telecom Implosion 195
6. Examination and Reform? 259
Notes 299
Index 325
Preface to the Paperback Edition
It’s been almost two years since I put the finishing details on the hard-
cover edition of Other People’s Money, and much has happened in the
meantime. Some practices have changed. Many more have remained un-
altered. But the main premise of the book—that things can go so obvi-
ously wrong, while the causes remain largely unaddressed—has stayed
disturbingly the same.
Goldman Sachs threw another gala Christmas party for its senior
members at the end of 2004, having missed year-end festivities in 2002
and 2003 due to cost cutting and general market malaise. Held at the
newly refurbished Museum of Modern Art, the celebration included
white-clothed waiters and tables, a lovely team of violinists . . . but no
Bette Midler.
Former Goldman Sachs president and chief operating officer John
Thain moved up the street to take the CEO spot at the New York Stock
Exchange (no one—certainly no one in Washington—appeared to con-
sider it a possible conflict of interest that the new CEO of the exchange
still owns about 3.2 million shares of the company that led the world in
equity offerings in 2004).
In April 2005, there was an equal lack of regulatory scrutiny—though
plenty of competitor grumbling—when Goldman acted as adviser to both
the NYSE (the acquirer and private firm wanting to go public) and elec-
tronic trading firm Archipelago (the “to-be-acquired” firm in which
Goldman owns a 15 percent stake). In only 500 of the 145,000 deals an-
nounced since 1982 was that dual position the case. Yet Goldman CEO
Hank Paulson, self-professed corporate governance crusader in 2002,
