And so we come to the issue lurking unstated in many people's mind: Can Lloyd Blankfein (Lloyd Blankfein news) survive this latest blow to the image of Goldman Sachs (NYSE: GS)? It's fair to say the SEC's (SEC news) charges of fraud related to a single CDO (CDO news) cap a period of unrelenting bad news, stoked by some emotional and critical media coverage. At some point, it's reasonable to assume that the board might be considering a do-over move.

Even if the stock recovers and even if the bank goes to trial and prevails against the SEC, which is not far-fetched, any victory now would be merely Pyrrhic. Strong earnings may salve the wounds, but the wounds cannot be denied. The board's reputation is on the line as well. One expert tells Bloomberg that it ought to be undertaking a comprehensive investigation in part to its own reputation.

We may see events such as these unfold: Charges are settled without Goldman Sachs admitting or denying guilt, perhaps over the objections of some executives; the bank issues an apology and announces changes to the way it discloses various information; Blankfein announces a time table by which he will transition to another role after a decently long tenure during which he saw Goldman Sachs through some dark days and powered the firm to new heights. It has been a successful tenure no doubt. 

For more:
- here's the Bloomberg article

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