Chapter 3: The Den of Corruption, Wall Street
Goldman Sachs Group, Inc., a titan of the global financial market and a leading American investment bank, began as a bill trading company founded by German-Jewish immigrant Marcus Goldman. By the 21st century, it had become a dominant force in the financial world.
With over 30,000 employees spread across 50 offices in 23 countries, Goldman Sachs rakes in money, indifferent to borders or currencies.
During the presidencies of Bill Clinton and George Bush, alumni of this firm served as Treasury Secretaries, earning it the nickname “the West Point of the U.S. Treasury.” They dismantled regulations, effectively giving Goldman Sachs wings to soar.
The firm manipulated financial records to facilitate Greece’s entry into the European Union, a move that later implicated it as a key player in Greece’s bankruptcy and the ensuing European financial crisis.
Yet, the company reaped enormous profits from these maneuvers, becoming a symbol of the excesses of neoliberalism and financial capitalism.
On the fateful Friday morning, standing in front of Goldman Sachs’ headquarters, I couldn’t help but ponder the company’s future.
Even as nearly ten million Americans lost their jobs and close to six million lost their homes due to the financial collapse, Goldman Sachs executives celebrated with champagne, pocketing billions in dividends and bonuses.
Failing companies would be propped up with taxpayer money, and they’d continue to churn out dubious financial products, amassing wealth.
I considered spitting on the ground but refrained. A sudden realization hit me—I was no different, just another player in the money game.
“Let’s go.”
The team leader from the TFT, who had accompanied me, swallowed nervously. The ten-billion-dollar deal had him on edge.
“These crazy bastards…”
The words slipped out in Korean as soon as we entered the lobby.
The lobby of Goldman Sachs was more opulent than any luxury furniture store in Nonhyeon-dong. The marble floors and walls were bearable, but who thought of making the reception desk out of marble too?
Even the chairs for those waiting briefly in the lobby were high-end, each costing hundreds of thousands of won. Dozens of such chairs lined up like a subway station.
I’d never seen such a display of wealth. Just as another curse was about to escape my lips, the team leader raised his hand to greet someone.
Following him into the meeting room, we found three people waiting for us: an executive and two managers. Their eyes gleamed as they prepared to devour my money.
“If you’re determined to proceed, I won’t stop you, but I must inform you of something.”
The youngest-looking man, already an executive, smiled as he spoke.
“Go ahead.”
“There’s a similar swap already in place. It was contracted two years ago…”
He must be one of those with the keen insight Rachel mentioned.
“The difference is that the contract from two years ago requires monthly premium payments. Initially, the premiums were low, but as the value of mortgage-backed securities rose, so did the premiums. They’re now paying around 9% in premiums, incurring significant losses.”
“So, you want our terms to be monthly instead of yearly?”
“No, just informing you. If you believe the rumors about mortgage loans being toxic, you’ll suffer great losses.”
“Are you aware that adjustable rates are being applied to home loans starting this year? Delinquency rates are already rising. Do you really think there’s no risk?”
I wanted to gauge their thoughts. Did they truly believe it was safe, or were they trying to hide the risk?
“Mr. Jin, securities are not loans. They are primarily AAA-rated, with a few subpar loans mixed in. That’s why it’s a good product. The AAA rating covers the losses of the B-rated ones. You wouldn’t throw away a perfect steak just because it has a tough tendon, would you?”
“Currently, housing prices are undergoing a slight correction. There won’t be a crash.”
One of the managers chimed in.
“We understand Goldman Sachs’ position. However, it’s not enough to change our minds. Thank you for the information, though.”
The young executive shrugged and clapped his hands.
“Shall we take a closer look at Miracle’s proposal?”
The three of them quickly skimmed through the summary we had prepared.
“The product analysis is excellent. As expected from Miracle.”
“If we can agree on two points, the contract should proceed without issues.”
Seeing their satisfied expressions, I spoke slowly.
“We’re willing to accept monthly insurance payments. Also, since there’s a precedent for premium conditions, we’ll follow that method.”
The team leader with me looked at me with concern.
Premiums could skyrocket if the value of the securities increased, potentially reaching unsustainable levels.
I nodded slightly at him, signaling reassurance, but his worry didn’t fade.
“You’re making it easy for us by saying what we wanted to say. Haha.”
Before the young executive’s laughter ended, I mentioned another condition.
“Since there’s a precedent, let’s set the insurance at 4.8%.”
His smile faded, and he looked troubled.
“Ah, the same terms as two years ago? That’s a bit difficult.”
“Why is it difficult? If the value of mortgage-backed securities has fallen, the risk has increased, so the insurance should rise. But hasn’t the value of securities steadily increased over the past two years? Doesn’t that mean the risk has decreased? It seems there shouldn’t be a problem with the same terms…”
The three, who had been licking their lips, whispered among themselves after asking for a moment.
After a brief pause, they cleared their throats and spoke.
“What amount are you considering for the swap?”
“It sounds like you’re willing to accept my terms depending on the amount?”
“Yes. If you exceed one billion dollars, we’ll agree to 4.8%.”
Got it!
I would have accepted even 5% or 6%. Few places could handle such a large amount at once like Goldman Sachs.
“Wow, everything’s resolved in one go.”
The three of them looked puzzled at my bright smile.
“With ten billion dollars, haven’t we settled both the total amount and the insurance rate at once?”
Their expressions were priceless.
They were astonished by the enormous sum and delighted at the windfall of 48 million dollars, 4.8% of ten billion.
And just a hint of vulnerability, like holding an ace in poker but being shaken by a bluff.
“Can I take your silence as a positive sign?”
“Oh, my apologies. Yes, you can take it positively. Or should we be the ones asking? Haha.”
The team leader with me was constantly sending and receiving messages, checking the status of employees visiting other financial institutions in real-time.
I filled in the blanks on the thick contract.
4.8% and ten billion dollars.
As soon as the contract was signed, both they and I beamed with satisfaction.
Where else could you find a contract that pleased both parties so much?
We stood up, shook hands with each person. My grip tightened involuntarily.
The team leader whispered in my ear.
“We’ve secured contracts with all 26 locations, including London.”
Seeing my even brighter smile, the young Goldman Sachs executive commented.
“Seems like you’ve received good news.”
“Yes, we’ve secured a very favorable contract.”
“Ah, congratulations. Could you give us a hint about it?”
“You’ll find out soon enough. It’s hard to keep such things under wraps on Wall Street, isn’t it?”
Two things spread quickly: someone hitting the jackpot or going bust.
“We’ll keep our ears open. Miracle is known for successful investments, after all.”
He didn’t realize the contradiction in his words.
With the contract signed, there was no turning back. I gave him a small hint.
“Miracle is famous for successful investments. So, wouldn’t this contract we signed today also be a successful one?”
I lightly waved the thick contract.
Our success meant their failure. A contract that satisfies both parties… is very rare.
Only then did their smiles fade.
People tend to avoid thinking about bad things. They downplay the possibilities.
They were likely feeling the creeping dread of the worst nightmare they had minimized—the collapse of the U.S. housing market.
“Well, time will tell who this contract is successful for. Then…”
Leaving them frozen, I exited the meeting room.
The clear New York sky looked especially beautiful today.
“Shall we grab some lunch? How about a delicious hot dog and some hot coffee?”
I led the still-anxious team leader toward a food truck visible at the corner.
That afternoon, I handed out generous bonuses to all Miracle employees and let them leave early.
I wanted to share my joy, and I knew that unexpected money and the leisure to spend it were the best ways.
I went to the bar I had visited with Rachel, wanting to celebrate alone.
As I sipped my beer and chuckled to myself, I overheard whispers around the bar.
“Did you hear about Miracle’s crazy spree today?”
“Of course. Who hasn’t heard?”
“How much did they throw around?”
“I’m not sure of the exact amount, but thanks to Miracle, everyone’s having a money party. I heard our Deutsche Bank alone got 12 million dollars.”
“Damn, the executives must be pocketing bonuses again.”
“Isn’t it nerve-wracking? If Miracle’s crazy gamble pays off, we’ll owe them 240 million dollars. The department that signed that contract is done for.”
“Have you ever seen a crazy gamble succeed? We’re going to be paying massive insurance premiums… Miracle might end up shutting down.”
But they couldn’t laugh at my so-called madness.
If you look at it from one angle, Miracle’s actions do seem insane. Yet, everyone knows the staggering amount of money that’s been funneled into Wall Street. A few phone calls would reveal it’s in the billions, and when madness crosses a certain line, people start taking it seriously.
That’s why, despite the worried whispers in bars, there was no laughter.
“Did you hear they pulled the same stunt in London?”
“London? The City?”
“Yeah. I heard they threw a six-hundred-million-dollar credit default swap contract at the Bank of England. Could they really be handling swaps worth hundreds of billions?”
“If, just if, Miracle’s bet is right, what happens then?”
“What happens? Wall Street’s screwed, that’s what.”
It’s Friday evening. Two days until Monday.
Those who catch on quickly will be scrambling to hold emergency meetings, while those who still think I’m crazy will be celebrating, thinking they’ve hit the jackpot.
“Hey, son.”
A middle-aged bartender with graying hair placed a beer bottle in front of me.
“Weren’t you here last time with Rachel, talking about seven hundred billion dollars or something?”
“Yeah, that’s right. You know Rachel?”
“Of course. She’s a regular here. Comes in for a couple of cocktails after work.”
“Really?”
“I also know she’s the boss at Miracle. So, is this crazy Miracle business everyone’s whispering about related to that seven hundred billion?”
The bartender couldn’t hide his curiosity, his eyes gleaming with interest.
I just wanted to enjoy a quiet drink, but the mood was ruined.
I pulled out a hundred-dollar bill from my wallet.
“Do you have a mortgage?”
“No. I’m debt-free.”
“That’s a relief. Then sell this bar before it’s too late.”
“What?”
The bartender was so startled he didn’t even think to take the hundred-dollar bill.
“Running a bar on a Wall Street full of unemployed people is a recipe for disaster.”
I gave the bewildered bartender a small smile and stepped out into the New York night.