With the housing and credit problems taking the US economy into probable recession, and banks experiencing daily shocks to confidence, one institution has so far come through with its reputation burnished and profits intact. Goldman Sachs, the legendary Wall Street investment banking and securities firm, has not just avoided the losses that are traumatising rival institutions - its profits are up significantly to $11bn
Where most banks are warning of cuts in year-end bonuses, Goldman executives are looking at a colossal $17bn pool to draw from and should see their bonuses grow by 20 per cent. While other banks lose their chief executives in the subprime mess, Goldman's chairman Lloyd Blankfein (right) is enviably secure. He's looking to take home $75m this year - up from $54m last year.
And when rivals lose their chief
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With profits up at
$11bn, the venerable
investment bank is
sitting pretty, says
edward helmore |
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executives in ritual sacrifice demanded by shareholders, they are often as not replaced with Goldman alumni - the newly appointed heads of Merrill Lynch, John Thain, and Citigroup, Robert E Rubin, are both former executives - and the firm's bankers are now placed in the highest echelons of power, including Hank Paulson at the Treasury and Robert Zoellick at the World Bank.
"Goldman Sachs has as much influence now as the old JP Morgan had between 1895 and 1930," Charles R Geisst, a Wall Street historian at Manhattan College, told the New York Times.
However, while Goldman traditionally preaches humility and public service as a duty that comes with wealth, the firm is not above sticking it to its rivals.
Indeed, the extreme volatility in the markets over the past week can partly be attributed to the firm's  |
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