Goldman Sachs Fights Back in the Blogosphere

(Feb. 10) -- Media coverage of Goldman Sachs generally falls somewhere between unfavorable and scathing, putting the world's wealthiest investment bank in a near-perpetual state of public relations defensiveness. Goldman's global communications head Lucas van Praag has traditionally handled the negative press by sending out e-mails and calling reporters to dispute their claims.

But on Monday he decided to turn to a scrappier, more democratic medium favored by many a wronged Web user: That's right, van Praag has now officially entered the blogosphere, courtesy of Arianna Huffington.

According to a spokesperson for The Huffington Post, where van Praag's response appears:

A few months ago, Mr. van Praag met Arianna for a drink and she invited him to blog. Mr. van Praag took Arianna up on her offer in order to respond to the New York Times story on Goldman Sachs which appeared Sunday. In keeping with HuffPost's mission of featuring a wide-range of voices and points of view, the site welcomed Mr. van Praag's post.

The New York Times piece that van Praag takes issue with alleges Goldman Sachs pushed insurance giant AIG "to the edge" financially, prompting the $85 billion taxpayer-funded bailout by the federal government in September 2008.

"This is the third theory the paper has put forward since September 2008," writes van Praag in his rebuttal, posted at HuffPo and on Goldman Sachs' official Web site. "The theories are contradictory and many of the supporting 'facts' don't stand up to serious scrutiny."

Whether or not van Praag is correct in his assessment of the reporting by the Times, the paper of record has indeed taken a close interest in the relationship between Goldman Sachs and its ill-fated trading partner AIG.

Since September the New York Times has published dozens of articles investigating the ties between both organizations, but the two other "theories" Praag refers to are probably found in two specific stories written by financial editor Gretchen Morgenson, who co-authored the latest story.

The first, published Sept. 27, 2008, contradicts Goldman's assertions it hedged its exposure to AIG and should not be forced to bear losses on insurance payouts. Instead, the story offers the claim of an anonymous inside source who says Goldman Sachs stood to lose $20 billion if AIG collapsed. In response, van Praag was compelled to e-mail Reuters contesting the validity of the source.

In another Times article from Nov. 21, 2009, Morgenson analyzes a report from a government inspector and finds that the Federal Reserve Bank of New York "caved in to AIG's counterparties, giving them 100 cents on the dollar for positions that would have been worth far less if AIG had defaulted." She says the report also "pokes holes in arguments made repeatedly" that an AIG default wouldn't cause Goldman Sachs any damage due to provisions undertaken by the latter firm. Van Praag answered Morgenson's questions about the report in a memo, which the Times then reprinted in full.

Beyond his outreach to the Times, van Praag has continually addressed the probing of his firm by turning to other media outlets, especially blogs and bloggers. He's answered questions posed by financial blog Zero Hedge and even contacted Reuters business wizard Felix Salmon to respond to an infamously provocative screed by Rolling Stone writer Matt Taibbi (Taibbi's 12-page magnum opus on Goldman Sachs is best known for his opening characterization of the firm as a "great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.")

Goldman has had trouble with other bloggers in the past as well: The firm took Floridian entrepreneur Mike Morgan to court in 2009 over his critical Web site, GoldmanSachs666.com, which includes numerous conspiracy theories and damning critiques by people who allege to be former employees of the firm. Morgan ended up winning the rights to the domain, providing he displays a screaming disclaimer dispelling any endorsement or connection to the actual Goldman Sachs. Morgan told the Telegraph he created the blog "after becoming incensed over the fall-out from Goldman Sachs' involvement with American International Group."

Now van Praag has decided to forgo an intermediary and begin blogging on his own at HuffPo -- a curious choice, as The Atlantic Wire notes, considering how much anti-Goldman coverage has come from the popular Web site.

The reactions of fellow bloggers to van Praag's first foray have been decidedly mixed. Salmon, for one, could not be more delighted, congratulating van Praag for presenting an "unfiltered" response. At the Wall Street Journal's Deal blog, Michael Corkery admits that van Praag makes some "interesting points," but finds "the Huffington Post piece reads more like a 'he said, she said.'"

MarketWatch's David Weidner is even less conciliatory, suggesting that van Praag's message backfired badly and that he "rethink the firm's strategy in the blogosphere." Finally, Claudia Deutsch, one of Taibbi's colleagues at the blog True/Slant, also considers the effort a cut-and-dried failure.

Still, there can be no denying the attention van Praag has attracted simply by turning to his own blog space rather than relying on a messenger. Whether or not he continues to blog and if so, how regularly, is anyone's guess. One thing is for certain: The Huffington Post is happy to have such a high-profile new blogger aboard.

"Mr. van Praag is welcome to blog as much as he would like to," a spokesperson told AOL News.

According to an interview with the American Society of Safety Engineers, van Praag has served in his capacity as global head of corporate communications for Goldman Sachs since his appointment in 2001. Before that, he was director of corporate affairs in Europe and Asia. From 1992 to 1999 he was a partner at financial PR firm Brunswick. He is an honors economics graduate of the University of Durham, England.