Business columns: Why Goldman is still the gold standard
Instead of being reviled, Goldman Sachs should be praised for being the sole Wall Street investment bank that “actually understands something about risk and risk-taking,” said William Cohan in <em>Financial Times.</
William CohanFinancial Times
Pardon me if I don’t jump on the Goldman-bashing bandwagon, said William Cohan. Instead of being reviled, the firm should be praised for being the sole Wall Street investment bank—“both recently deceased and still living”—that “actually understands something about risk and risk-taking.”
Goldman Sachs CEO Lloyd Blankfein, who calls risk management his most important job, is a man who thinks obsessively about the worst-case scenario. That scenario materialized during last year’s market meltdown, when Lehman Brothers failed and AIG looked about to follow suit. Having prepared for the worst, Blankfein and his colleagues were able to quickly raise $5 billion from Warren Buffett and an additional $5 billion in a public stock offering. The capital cushion left Goldman better able to profit than any of its rivals when financial markets rebounded. To top it off, Blankfein was the only financial CEO who “had the decency to say sorry—albeit belatedly—for the role his bank played” in the crisis.
Certainly, there’s much to criticize about Goldman. But Blankfein and his colleagues appear to “actually lose sleep over the possibility of losing their shareholders’ and creditors’ money.” Other bankers should try that sometime.