A Banking Insider on Goldman, Greece and Hookers

Langone has no patience for the new finance regulations or the people who pushed them through

There are a few people who can weigh in on topics as varied as financial regulation, New York politics and Playboy centerfolds with as much authority and passion as Kenneth Langone. The billionaire sat down with us to offer his advice for Wall Street, Washington and those contemplating $2,000 escorts.

The Observer: What are your thoughts on the May 6 “flash crash”?

Langone: I didn’t think much of it. We dropped 1,000 or so, we came back up, the very nature of the volatility was clearly something in the mechanism of the market doing what it wanted to do. There was no impact on value in the long term.

What do you think of the argument that Goldman Sachs is a different bank today than it was during your time, when it was run by bankers who had a commitment to clients, as opposed to now, when it’s supposedly traders running the show?

I think that argument is ridiculous. And as for the SEC case, let me just say it is a disgrace. They have no case. The essence of the case is that the buyer should’ve been given (former CEO Henry) Paulson’s name. Forget about the fact that he wasn’t big then like he is today. Goldman had an ethical requirement to not give up names on either side of the trade to the other. That case is totally without merit.

What you think of the proposed financial regulations?

I think they’re far too complicated for someone as simple as me to understand. Listen, when we look at where we were almost two years ago, the financial community was right in the middle of what was going on, and we need to be honest about their role. But we also need to be very careful that we don’t kill the United States’ capital formation capabilities.

And what of the proposed clampdown on the banks’ proprietary trading?

I think there should be some kind of limit for the banks that are run irresponsibly. There should be a consideration of a limitation on risk. But we need to be very careful because the changes to the banking system could have a profound impact on the economy.

New York magazine has a story out about the relationship between Obama and Wall Street, post-bailout. The White House thinks the banks aren’t grateful enough about what was done for them, while the banks think they’ve been plenty appreciative and treated unfairly. Who’s right?

All I’ll say is, look at the two most prominent names in banking—Goldman Sachs and JPMorgan—neither wanted TARP money, but they were told by Hank Paulson that they had to take it so that they wouldn’t stand out as the healthy ones and make the other banks look weaker. Goldman didn’t need the money; they could’ve survived without it (though Lloyd didn’t know if there were going to be any big failures, and the systemic risk that would create for him).

Your nearest and dearest friend, Eliot Spitzer, has been saying he has no “plan” to run for office again, i.e., it’s only a matter of time now. How would you react to that?

Let me be very blunt—if the public wants more of this guy, then it serves them right to get what happens to them. He’s proven he is unworthy of public trust. The notion he has something to add is nonsense. He’s done more to destroy value than anyone in the country. Look at what he did to AIG! Forget about the hookers—he is a consummate liar with no ethics.

You said in 2005 you’d do whatever it took to show people he was not publicly fit to hold office. Would that perhaps have involved tipping anyone off about the hookers?

I will say this for the umpteenth time—I never had him tailed.


You know the girl wasn’t much older than his daughters? It’s horrible what he put his wife and kids through.

I know, and she recently had a spread in Playboy—

I saw it.

What did you think?

She’s a very attractive girl.

Worth $2,000 an hour?

Not for me. I’m married to a beautiful woman, 54 years. That’s how I do business.