Goldman Sachs good for society?
Veteran Wall Street bank analyst Michael Mayo has asked a surprising question: "What part of Goldman Sachs is good for the country?" The question is not surprising for the bank's many critics, but from a venerable Wall Street analyst, it seems to be a case of breaking ranks.
But the facts are clear are at Goldman Sachs (NYSE: GS)--it's now a trading house more than anything else. The New York Times notes that "at Goldman, trading and investing for the firm's account produced 76 percent of revenue last year. Investment banking, which raises capital for productive enterprise, accounted for a mere 11 percent."
This has been a huge, albeit gradual, cultural change at Goldman Sachs, which used to pride itself on serving the corporate world. It was all about raising capital for the top tier. But with the rise of Lloyd Bankfein (Lloyd Blankfein news) came the rise of the trading culture, and now no one laughs when you call the firm a giant hedge fund.
It's much harder to make the case that all this trading is good for society, even though some have hailed short sellers as sleuths rooting our fraud. For the innovation revolving around mortgage-backed securities, home ownership rates have moved little.
- here's the New York Times commentary