Goldman Sachs and Its Reputation Harvard Case Solution & Analysis

Goldman Sachs was a bank, but it did not take deposits, problem credit cards, make mortgage loans, or interact with consumers. For the majority of its history Goldman was organized as a partnership and operated as an investment bank participating in underwriting new securities to raise capital for corporations and public agencies, advising customers as in mergers and acquisitions, and managing assets for customers. Goldman went public in 1999, predicting that its investment banking company would continue to provide the majority of its earnings and gains.

Shortly, however, its proprietary trading and trading on behalf of customers began to predominate both its sales and profit streams. The leadership of the company also shifted from investment bankers to dealers, for example Henry Paulson and CEO Lloyd C. Blankfein. Goldman was a major participant in the CDO market and was a major player in the events leading to the fiscal disaster. As with most financial institutions Goldman was heavily criticized for its function in the disaster. The disclosure that Goldman had allowed an investor to pick securities for inclusion in a CDO that the investor meant to short caused an uproar, especially as the purchasers were not advised of the investor's part. The media covered the issue extensively, hearings were held by Congress, the SEC filed a suit against Goldman, suits were filed by private investors, and the business was shunned by a few issuers of securities. The organization faced the decision of the way to reconstruct its reputation as it addressed new regulations on banks as an effect of Dodd Frank and Federal Reserve activities.

PUBLICATION DATE: January 01, 2011 PRODUCT #: P77-HCB-ENG

This is just an excerpt. This case is about FINANCE & ACCOUNTING

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