The bank has a culture that works. So what?

The image of Goldman Sachs (GS) as a Borg-like hive mind that breeds a bald master-race of capitalists has picked up speed during the last month. Rabble-rouser Matt Taibbi in Rolling Stone memorably called Goldman "a vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money." Joe Hagan in New York magazine devoted several pages to "Goldman's current public tarring." The controversy has even attracted the genius of Michael Lewis, who wrote a searingly funny column in the wounded voice of the firm, arguing that Goldman owns only one of the three branches of government outright and that the firm habitually rounds down any number under $50 billion directly to zero.

Needless to say, there is much to make Goldman's rivals suspicious. Super-powered trading programs? Politically prominent alums? Orcs and vampire squid? No wonder rivals can't imitate returns like the firm's $3.4 billion second-quarter profit. These guys are clearly running on a supernatural level, right?

Mission accomplished: The House of Representatives now wants to call Goldman—a firm that no longer owes anything to the government—on the carpet in what are sure to be disastrously populist hearings.

Enough already. After years of full-on Goldman Sachs conspiracy theories—implying that the firm runs the world—we all know that Goldman Sachs alums get pretty good jobs when they leave the firm. But the real question to ask is why they don't do better. If you believe that Goldman Sachs has designed the kind of devastating hive mind that can control any institution it touches, including the U.S. government, you also have to explain why Goldman Sachs alums have a history of not functioning terribly well outside of Goldman. Why, for instance, did Henry Paulson, by all accounts a brilliant man, flounder about in the politics of the Treasury so desperately that he was forced at one point to plead with Nancy Pelosi on bended knee? Why did the first TARP overseer, Neel Kashkari, get yelled at by Congress while performing the thankless job of managing the $700 billion kitty of the government? Why did Edward Liddy, former Goldman board member who served as the new CEO of AIG (AIG), quit in a huff over bonuses?

And it's not just the TARP boys. Look at Goldman Sachs alumnus Jon Corzine, enmeshed in scandals as governor of New Jersey, or John Thain, the Goldman Sachs alum who, whatever his capabilities, will always be remembered as the guy who charged a $35,000 commode to Merrill Lynch. Or consider Robert Rubin, the former treasury secretary and Goldman alum who flamed out at Citigroup after collecting tens of millions of dollars in compensation for many years. Or Stephen Friedman, who stepped down from the Federal Reserve Bank of New York under sketchy circumstances.

On Wall Street, I often heard from several bankers who had hired former Goldman bankers and were disappointed at the lack of magic or voodoo. These bankers theorized that Goldman bankers lacked the scrappiness or hustle of their colleagues; in previous lives, the allegation goes, their work was done when they dazzled a client with a Goldman Sachs business card. As Hagan points out, the difference is the Goldman culture. In fact, the highest compliment one Goldman banker can give to another is to call him or her "a culture carrier." But what is the Goldman culture, and why does it make such a difference? I talked with current and former Goldman bankers and officials to find out. Obviously, their views on it were mostly positive—but isn't that what you want to know: why Goldman bankers are so fervent about their culture?

So let's proceed. The basic rule of Goldman culture is that the company manages its people exactly the opposite of how every other Wall Street firm does. It's not that Goldman doesn't have its egos—it surely does—but as a matter of management, the firm also has several safeguards in place to keep rampant egos from destroying decision-making. Another thing that makes Goldman different from other firms is not that all Goldman bankers agree but that they are free—and, in fact, encouraged—to disagree. Anyone who has read accounts of Goldman's knockdown, drag-out fights over going public will understand this, as will anyone who has read two great books about Goldman: The Partnership and The Culture of Success. The firm's management committee meetings are, by all accounts, rambunctious affairs full of disagreement. John Thain once presented a case for Goldman's IPO to the management committee, and several of his fellow partners disagreed. Thain's reply to his vehement colleagues, according to Bloomberg: "Would it hurt you to suck up to me once in a while?" CFO David Viniar is a dragonlike protector of the firm's balance sheet, known to shoot down trading ideas and expansion plans day in and day out. Viniar's default answer, according to Goldman bankers, is "No," and he is known for his even-handed rejection of expensive schemes.