JPMorgan fallout:

Crisis experts liked Mr. Dimon's forthright response to the billions in trading losses JPMorgan disclosed last week. Lucas van Praag chimed in: "From a communication perspective, the approach is smart, although I'm sure their legal team would probably rather pursue a bunker mentality."

Simon Johnson parses Tim Geithner's NewsHour interview and hears the Treasury secretary asking Mr. Dimon to resign from the board of the New York Fed.

JPMorgan's losses are "the way America works," Mitt Romney in an interview Wednesday with Ed Morrissey. “The $2 billion JPMorgan lost, someone else gained.”

How high? Your guess on Facebook's closing price is as good as ours. Reuters finds a 15 to 20 percent pop credible, which puts the price in the mid-$40s; the average estimate of analysts polled by Morningstar was $50. On twitter yesterday, it wasn't hard to find pundits pushing estimates well into the $70s (those higher marks seemed less serious, more sneering).

Meanwhile, Facebook will pay it's underwriters $176 million in fees, or 1.1 percent of the $16 billion offering, a hefty discount to the median 3.6 percent that the 10 previous biggest U.S. IPOs paid investment bankers.

Not breaking up? Greek voters are returning to pro-bailout parties, a new poll finds. The prospect that the leftist Syriza coalition, whose leader Alex Tsipras has threatened to "tear up" the existing rescue plan, increasing fears that Greece may leave the eurozone.

Still, a commercial printer is drawing up plans to produce drachma banknotes, in the contingency of a Grexit.

Spanish steps: Moody's downgraded 16 Spanish banks, and the two biggest by three grades each. A little perspective: Morgan Stanley said that a three grade cut by two ratings companies would force the firm to post an additional $9.6 billion in collateral.

Spain tapped Goldman Sachs to value nationalized lender Bankia SA.

A-list: Goldman executives Lloyd Blankfein, Gary Cohn and David Viniar, American Express CEO Kenneth Chenault and former Proctor & Gamble CEO A.G. Lafley are among the financial industry titans to receive invites to the insider trading trial of Rajat K. Gupta.

Oracle offered: Warren Buffett kicked the tires on ResCap, Ally Financial's mortgage unit, before the embattled home lender filed for bankruptcy, according to Bloomberg. Buffett sought to avoid a ResCap filing because his firm, Berkshire Hathaway, held unsecured debt in the lender.

[Photo by Mario Tama/Getty Images]

The interview was given to a Dutch television program, in a taped, on-record call to the program's aggressive line of questioning that Mr. van Praag responded to in full, apparently not taking any time to go off-record or end the interview at particularly hostile junctures.

Dealbook's Kevin Roose reports:

Mr. van Praag knew the telephone call was being recorded, but intended to have only the brief recorded statement used in the broadcast, according to the person. Mr. [Alexander Oey, the Dutch program's director] kept the questions coming, however, and nearly 40 minutes later, he had scored what amounted to one of Mr. van Praag’s widest-ranging interviews about Goldman’s business practices in the last several years.

The title of the report, translated, is "Goldman Will Get Back To You," a refrain plenty of journalists who've attempted to report on the banking behemoth and Mr. van Praag have no doubt heard countless times. This is a guy who has taken to criticism of the bank as Pete Sampras would a soft lob: By smashing it back in the faces of lesser humans attempting to outsmart him, which goes without mentioning the toy "vampire squid" he kept at his desk.

Dealbook posted some clips from the interview. In one of them, Lucas van Praag discusses the inherent problem facing the human inclination towards greed:

"I think greed and jealousy and sloth are all unfortunate traits of human nature, so I don't think you can come up with a system that prevents people from being greedy and jealous and lazy. I think that you can come up with a system that doesn't reward that kind of behavior. It's difficult, but it's not impossible. I think that one of the problems—one of the unintended consequences of trying to do that in this crisis has been that regulators have required banks to pay higher base salaries and lower bonuses. What happens is that the fixed costs of banks have gone up significantly. Of course, in an environment where compensation is your largest cost—which is true for all banks in the investment banking space—you suddendly have significantly reduced the bank's ability to manage its cost. So I think you need to be sure you have a system in place that doesn't reward greed, and there are lots of ways to do that, but increasing fixed costs adds an extra layer to the system."

And how did Goldman itself deal with that? The whole greed thing? the interviewer asks.

"Well, we have a very rigorous risk-management system, and we're very transparent internally about what risks we're taking and what the potential impact is across the board. But also, we don't pay people on their individual profit and loss. And that's particularly important at the most senior levels, so the most senior people at the firm have a view of what they're doing, which is across the whole organization. In other words: We really actively discourage the silo-mentality. We don't want people to think very narrowly about their business that they're running."

Also:

"We don't bet against our clients. What we were doing, in our view, was being effective risk managers."

There's that, and so much more over at DealBook.

For what it's worth, this is the kind of thing that's going be poured over and rigorously studied in the future* when people want insight into the message-mentality of the rulers of global finance in 2012.

[*And to be clear, by "future," we mean, "any time between right this instant and the next fifty years or so."]

fkamer@observer.com | @weareyourfek

Via Getty.

If you haven't already read it, this week's New York Magazine profile of "misunderstood creature" and Goldman Sachs CEO Lloyd Blankfein by Jessica Pressler is many things, but most prominently: weirdly fun, especially concerning a revelation about Mr. Blankfein's pop culture proclivities. 

Highlights include the Catskills-esque banter between himself and GS mouthpiece Lucas Van Praag, the foxhole-perspective on being assaulted by nuns and the infamous Evelyn Davis, and of course, some insight into the question every profile should answer: Who is this person? And the answer?

A Lady Gaga fan and friend of 50 Cent:

By 16, he was already at Harvard, where he earned a reputation for his ability to memorize television jingles and popular songs. This, by the way, is a talent he still retains. “I was born this way,” Blankfein sings at the diner. “Born this way …” He recently attended a Lady Gaga concert with his 17-year-old daughter. “I am one with the popular culture,” he says. (He also once met 50 Cent at a play, where they discussed “businessy things.” “He’s an impressive kid. And by the way, it’s Fitty Cent. Fitty.”)

Born this way indeed. And really: 50 Cent and Lloyd have a few things in common. Mr. Cent has been viewed skeptically with regards to money. As has Mr. Blankfein! And come to think of it, Ms. Gaga only compounds the curious trifecta with the narrow differences of their lives.

As such, we've visualized what data we can gather on three for a comparative analysis.

Click to enlarge:

fkamer@observer.com | @weareyourfek

There was nary a Victorian put down in sight! The writer Heidi N. Moore even took to Twitter to complain.

But they don't need to worry. Today, Goldman Sachs posted the full exchange between Mr. van Praag and The Times, introducing the transcript with this: "The article includes grave inaccuracies, cites accusations from anonymous sources and is fundamentally misleading." The answers that were used in the article are bolded by Goldman to show that "selective portions of our responses" were chosen by the newspaper.

Even if Mr. van Praag hasn't used antique adjectives recently, the lesson is that nothing much has changed about the way Goldman communicates with the world. For example, back in 2005, after the bank was linked to both sides of the New York Stock Exchange's takeover of Archipelago, its response was so terrifically smug ("Life is full of conflicts, real and imagined," Mr. van Praag said), that a conspiracy Web site picked it up. This time around, today's story was about Goldman's conflict between making money for a client and making money for itself at a client's expense. The paper even reported on an unspoken principal at the bank that says if you're not embracing conflicts, you are not being aggressive enough. "We’re not aware of this so-called 'unwritten principle,' but every large financial institution, in fact virtually any business in any industry, has potential conflicts," Mr. van Praag responded, according to Goldman's site.

Goldman's aggression will not go away, as the bank itself has said. "The approach we've adopted to media coverage is that we aggressively rebut and refute reports or commentary that we believe are wrong," Mr. van Praag said recently. "And if you want it to be noticed, you've got to make it notable."

Update: Here's an interesting Goldman acid test. Yesterday afternoon, Reuters' Felix Salmon wrote about a company called American Homeowner Preservation, which has an immensely reasonable plan that would keep a family from Windham, Ohio, in their home of 18 years. But the Goldman Sachs–owned Litton Loan Servicing has essentially gotten in the way, and the family's house faces a sheriff's sale on May 24--next Monday. It will be interesting to see what happens. (Here's a start).

"The best thing to do is kind of what the p.r. consultants said, speak a little less, do a lot to serve your clients and your shareholders," Jon Corzine told Bloomberg Television this morning.

Having made his own missteps on the way to losing his re-election bid last year, the former New Jersey governor knows how easy it can be to let something like "God's work" slip out there. "It is easy to mis-phrase something at the wrong time. Maybe you thought you were tongue in cheek," Mr. Corzine said.

Though he was ousted in an ugly coup ten years ago, Mr. Corzine isn't one of the haters. "People are broadly frustrated with the financial institutions, and since it is the leader of the industry and has shown great success over a long period of time, I think it's more vulnerable," he said.

Over the weekend, the Post said that Goldman Sachs had hired the Texas-based public relations firm led by Bush confidant Dan Bartlett to gauge the marketplace's "perception" of the firm. Does that mean the Bentley sunroof is closing? Not quite. "In short, no news here. Carry on," the Wall Street Journal said, pointing out that Mr. Bartlett's firm had done market research for the investment bank before. And don't forget that Goldman watchers like Charlie Gasparino have been talking for months about Goldman looking for public relations help.

After last week's Observer story, there was buzz about Mr. van Praag's fate at Goldman--but the issue is more interesting than one spokesperson, even if his vocabulary is exceedingly awesome. The firm's real problem has been a widespread and constant sense it gives the world that it considers itself untouchable and invulnerable ("We did not have a near-death experience," "We would not have failed"). As the profile said, that's a worse message than Lloyd Blankfein's famous "God's work" blunder, because it insists, unsmilingly, that Goldman is God.

"I fear the traders running the place do not understand that, while they are the biggest and baddest players in the global financial markets, who have to apologize or explain themselves to no-one, they don't control the game," The Epicurean Dealmaker said recently. "Politicians and regulators do. (And they answer, at least indirectly, to the general public.) These are the people they have to appease. Or at least not piss off."

Whether or not Goldman Sachs executives are turning to a Bush-connected consultant in Texas, will they decide that they no longer want to openly irk everyone? Can the firm restrain itself, in other words, from opening its sunroof?

The first thing Wall Street thought when it saw chief Goldman spokesperson Lucas van Praag’s greatest phrases compiled into a post on New York magazine’s Web site on Monday, Feb. 1, was that the man has a way with words. Mr. van Praag owns a dazzling vocabulary that’s allowed him, in the last three weeks alone, to bemoan the shoddy tittle-tattle of the Sunday Times and The Wall Street Journal’s preposterous effluent.

But the second thought is that all of these majestic Victorian taunts might not be in the best interest of a firm that large sections of a beleaguered country are quick to pounce on every time the Dow takes a dip. Nevertheless, the message from Mr. van Praag and his team has been that criticism of the firm is not only moronic—“chimera produced by a febrile mind”—but that criticizers are troublemaking simpletons who, as he likes to say, are doing their readers a great disservice.

“The firm has to make its case that it is not some black-hearted villain. And when you’ve got somebody who is openly disdainful towards the press, making that case is very difficult,” said another communications executive at a finance firm. “It’s not as though it’s ineffectual. It’s positively causing harm.”

>>READ MAX ABELSON'S PIECE ON "THE HOUSE THAT GOLDMAN BUILT"

There have been some bursts of public meekness, to be fair, but nothing like the relatively persistent humility from Morgan Stanley’s chairman, John Mack, and JPMorgan chief Jamie Dimon. And Mr. van Praag has made clear that periodic Goldman charm offensives are merely obligatory.

In interviews this month, other Wall Street PR chiefs, Goldman alumni and major financial journalists wondered how the famously shrewd firm, not to mention its savvy and droll spokesperson, have allowed things to veer this far off course. Even beyond obvious gaffes like Lloyd Blankfein’s “God’s work” quote, given by the firm’s CEO to London’s Sunday Times, whenever a Goldman executive insists that the financial crisis just wasn’t scary for them, and Mr. van Praag repeats that those who think otherwise are ill-informed tattlers, Goldman gets uglier.

“At a time when people perceive banks to be elitist and beneficiaries of the bailout at the expense of average homeowners, to go around and stick your head out of the sunroof of your Bentley and say, ‘Fuck you, critics,’” a business editor at a major publication said last week, “is counterproductive.”

MR. VAN PRAAG, 60, is predisposed to a certain debonair resolve. His father, Louis, was an English textile manufacturer and design consultant who spoke unimpeachable French, and was described in his obituary as “charming, stubborn, and very funny.” He spent decades trying to convince the English that they needed to catch up with foreign designers, but he did it with a persuasively “cosmopolitan air.”

And he wore a monocle. Goldman’s spokesperson does not, though he is known for a pinky ring. “His carriage is very Masterpiece Theater,” the writer Joe Hagan said. “I think he enjoys being Lucas very much,” John Arlidge, who did the “God’s work” interview, said recently. “He’s living the Lucas life.”

Mr. van Praag graduated from the University of Durham, the oldest British university after Oxford and Cambridge, with a joint honors degree in economics and economic history. He was a Merchant Navy officer, spent 10 years at Bankers Trust, left to run a British manufacturing company and worked through the ’90s at the Brunswick Group, where he was said to be a right-hand man to the public-relations guru Alan Parker, whose son’s godfather is Prime Minister Brown.

No doubt about it, Mr. van Praag is charming. In 2001, new to Goldman, he persuaded a Financial News reporter curious about an anonymous buyer of the firm’s shares to instead write about “the talents of his brilliant artist brother-in-law,” who was about to have a gallery show.

There were dark moments back then, but the stakes weren’t the same. In 2002, after he’d been promoted to be Goldman’s global head of corporate communications, Michael Oxley’s House Committee on Financial Services accused the firm of “spinning”—granting IPO shares to important investment banking clients who flip for big profits. Mr. van Praag called it “an egregious distortion of the facts,” saying the committee drew a conclusion that was “completely inaccurate. It’s rubbish.” And in 2005, his response to the report that Goldman was linked to both sides of the New York Stock Exchange’s takeover of Archipelago was so gorgeously smug that conspiracy Web sites picked it up. “Life is filled with conflicts,” he declared, “some real, some imagined.”

But those were different times, and the clamor was balanced with calm. He called it extremely embarrassing when a senior Goldman economist was charged with insider trading, ruminating on how “a single act has the potential to undermine the best efforts of everybody.” When the firm, along with nine others, agreed to a $1.4 billion S.E.C. settlement after investigations into investment-banking influence on research, he moved away from the egregious-rubbish line: “With the benefit of hindsight, it’s clear that we all—everybody in the industry—could have done better.”

In October 2006, he made partner at Goldman. “Congratulations to Lucas van Praag,” said The Daily Telegraph, “surely the world’s highest paid mouthpiece.” A while later, he and his wife paid $7.85 million for an uptown townhouse with radiant-heat floors. He would not comment for this story.

“LOOK, LUCAS IS an amazingly brilliant guy,” a former communications colleague said. “In the best of times, he can come off as arrogant, slightly pompous, flippant and condescending.” In bad times, the financial crisis has brought a new octave to Mr. van Praag, and his message has become, as he would say, febrile.

In response to the September 2008 Times cover story that reported on the many billions of dollars tying Goldman to AIG, Mr. van Praag told Reuters that it was simply wrong to suggest his firm might have been worried about the insurance giant’s fate. The piece was “seriously misleading,” he said, because “our exposure to AIG was, and is, not material.”

That firm’s counterparty list—the firms on the other side of trades with AIG—was released last March, with Goldman Sachs’ name right at the top: “For the record then,” the Financial Times said, “it certainly was not the NYT that was ‘seriously misleading.’” Afterward, Goldman insisted that it would have been fine without the historic AIG bailout. The American government paid counterparties at 100 cents on the dollar, which meant $12.9 billion for Goldman alone.

However much you know about the details of opaque derivatives agreements, or whatever you feel about the firm’s splendor or evil, it is exceedingly difficult to conceive of a scenario in which Goldman lives through an AIG failure and the ensuing chaos. But in last month’s interview with Vanity Fair’s Bethany McLean, before she finished asking if the firm could have survived without the government’s widespread intervention, Goldman’s president, Gary Cohn, says, “Yes!” And when their stock price sunk from above $207 in early 2008 to below $48 in November? “It wasn’t,” he said in the piece, “scary at all.”

Meanwhile, Andrew Ross Sorkin’s Too Big to Fail, a distinctly unhysterical chronicle of the crisis, describes in no uncertain terms the panic at Goldman that September. Mr. Cohn even moved to a downstairs office so he could watch the trading floor, and personally called a billionaire who took most of his money out of Goldman. In some ways, denying vulnerability is a worse message to send then Mr. Blankfein’s half-joking blunder in the Sunday Times this November, when he said the firm does God’s work. Because this says, with a straight face, that Goldman is God.

That’s why, even if some of the national Goldman outrage is unreasonable, what makes even less sense is how terribly the firm has responded. “What I would have said is, ‘Listen, guys, I don’t think anybody’s buying it,’” a communications executive at a rival bank said. “Is it that these guys just smoke their own crack, that their culture is so insular that they don’t have someone giving the perspective that this is just ridiculous?”

Indeed, it’s hard to imagine that he hasn’t been encouraged by Mr. Blankfein, CFO David Viniar and longtime Goldman major-PR-domo John Rogers (the “slight, retiring man with a preference for tan raincoats,” as a Landon Thomas profile once put it), because they’re toeing similar lines. “We did not have a near-death experience,” Mr. Cohn told The Times in August.

IT’S ARGUABLE THAT in some cases, like a quote in the Post that called a recent magazine profile “garbled nonsense,” Mr. van Praag has helped soften journalistic blows. But then there’s Matt Taibbi’s Rolling Stone epic, whose second sentence called Goldman “a great vampire squid wrapped around the face of humanity.” The article wasn’t even online when Mr. van Praag, in that wondrous style, disparaged the piece and its author to Reuters’ Felix Salmon. After a similar Post item, The New York Times reported on Goldman’s response. “If I were in their position,” Mr. Taibbi said recently, “I would have just ignored us. We’re a music magazine.”

“In any crisis, the spokesperson, or the head of the company, has to proceed with modesty,” the PR elder statesman Howard Rubenstein said, though he wouldn’t comment about Mr. van Praag. “Stick to the facts, be clear, don’t belittle, and you will protect the client.” When Mr. van Praag wrote a letter to the Financial Times last year, he mocked a reporter’s facility with numbers along with his article. “I note,” he wrote at the end, “that he did manage to convince the Huffington Post,” the Web site on which, last week, Mr. van Praag posted a critique of The Times.

In December, Charlie Gasparino wondered aloud on the Daily Beast if Mr. van Praag might lose his job. “I think that this is such an unmitigated disaster,” another veteran Wall Street writer said last week, “that eventually it will require something public and substantive to happen.”

Then again, why would Goldman Sachs suddenly have a change of heart? The era of vilification, just like the era of sparkle, could very well pass. “Oh, absolutely, there’s no question,” The Wall Street Journal’s Susanne Craig said recently. “All of these things go in cycles.”

mabelson@observer.com

More from Max Abelson:

The House That Goldman Built

The Wall Street Ex-Wives' Club

Portrait of the Banker (as a 29 year-old)

"This is the third theory the paper has put forward since September 2008," Mr. Van Praag wrote. "The theories are contradictory and many of the supporting "facts" don't stand up to serious scrutiny."

But, according to Timothy O'Brien, the Sunday Business editor for the Times, it's Mr. Van Praag's own analysis that misrepresents the paper's story. "I think almost all of Lucas' responses to our piece in his note to the HuffPost were already reflected in the story itself. I don't think any of his responses contradict or undermine the exploration of Goldman's relationship with AIG, as laid out in Gretchen Morgenson and Louise Story's deeply reported piece," he wrote in an email to the Observer this afternoon.

Of the nine "NYTAssertions" highlighted by Mr. Van Praag--along with corresponding responses labeled "The facts"--Mr. O'Brien took exception to one, in particular. From the HuffPo entry:

NYT assertion: "In addition, according to two people with knowledge of the positions a portion of the $11 billion in taxpayer money that went to Societe Generale, a French bank that traded with A.I.G, was subsequently transferred to Goldman under a deal the two banks had struck."
The facts: The assertion is false and misleading. Goldman Sachs provided financing to many counterparties, but in that role we would not have known whether a counterparty had obtained credit default protection, let alone from whom or in what amount.

"Louise Story asked Lucas to go on the record twice to comment on that issue and Lucas declined," wrote Mr. O'Brien in an email to the Observer this afternoon. "Although he's decided to go on the record on the matter after we published our piece, he's still not actually addressing what we wrote."

Mr. O'Brien said the story never claimed Goldman provided financing for Societe Generale. "Rather, it is our understanding that Goldman purchased AIG insurance on mortgage positions from SocGen, insurance SocGen itself had purchased from AIG at an earlier point in time. When the US government bailed out AIG and reimbursed SocGen, Goldman and other firms at 100 cents on the dollar for their AIG contracts, it is our understanding that a portion of the amount paid to SocGen was then channeled to Goldman," he wrote.

Mr. O'Brien also wondered how--if Goldman doesn't know whether a counterparty purchased credit default protection--Mr. Van Praag could assert the Times' report was "false."

Mr. O'Brien's response, in full:

I think almost all of Lucas' responses to our piece in his note to the HuffPost were already reflected in the story itself. I don't think any of his responses contradict or undermine the exploration of Goldman's relationship with AIG, as laid out in Gretchen Morgenson and Louise Story's deeply reported piece (which I edited, along with BizDay editor Larry Ingrassia).

Lucas wanders a bit in one of his responses, regarding Goldman's trading relationship with SocGen. Louise Story asked Lucas to go on the record twice to comment on that issue and Lucas declined. Although he's decided to go on the record on the matter after we published our piece, he's still not actually addressing what we wrote.

To wit, we didn't write that Goldman provided financing to SocGen, as Lucas states. Rather, it is our understanding that Goldman purchased AIG insurance on mortgage positions from SocGen, insurance SocGen itself had purchased from AIG at an earlier point in time. When the US government bailed out AIG and reimbursed SocGen, Goldman and other firms at 100 cents on the dollar for their AIG contracts, it is our understanding that a portion of the amount paid to SocGen was then channeled to Goldman.

As a reminder, here's what the story actually says: "In addition, according to two people with knowledge of the positions, a portion of the $11 billion in taxpayer money that went to Société Générale, a French bank that traded with A.I.G., was subsequently transferred to Goldman under a deal the two banks had struck."

Furthermore, it appears that Lucas contradicts himself in his rebuttal. He says that Goldman "would not have known whether a counterparty had obtained credit default protection, let alone from whom or in what amount." If that's true, then how is Lucas able to say that what our reporters wrote is "false"?

All best,

Tim