All That Glitter Is Not Goldman Sachs

Abstract

In 2007 the sun was shining, the birds were singing, and the U.S. economy was performing exceptionally well. In fact the economy was performing so well that experts began to worry that the economy was incredibly unstable. By Fall 2008, the experts' instincts proved correct and the U.S. economy plummeted into a deep recession. However, the real trouble occurred on Wall Street as three of the largest investment banks collapsed. Goldman Sachs, however, exceled during the crisis proving it was a truly a "golden" company.

The state of the U.S. economy has led to countless debates over who is explicitly responsible. The various statements, given by experts, only offer confusing jargon blaming congressmen, investment banks, and individual CEOs. Although we may never know who is truly responsible for the financial crisis, certain aspects of the crisis require attention. For the purposes of this white paper, the discussion will focus mainly on Goldman Sachs, a global investment banking and securities firm. The paper will discuss the company's role in investment banking, its relationship with government officials and its competitors, corporate ethics, and the global image of the company.

When discussing the financial crisis the name Goldman Sachs appears almost as much as the Dow Jones Industrial Index. This explains why the relationship between Wall Street giants and Main street politicians has led many to refer to the last 16 years as the Goldman Sachs administration. Additionally, the SEC hearings involving Goldman Sachs have led many to debate over the concept of financial regulation. Nonetheless, Goldman Sachs has been able to survive countless criticisms and succeed immensely. In order to explain this success, the paper will discuss the economic view and the role of scarcity in driving business and systems such as Collateralized Debt Obligations (CDOs). In analyzing these systems the paper will discuss how they were designed to maximize profit but in fact proved detrimental to the funds of investors.

This discussion will lead us to a very common subject, known as corporate ethics. In recent years we have seen this topic thrown around social media, but this paper will explore Goldman Sachs' take on corporate ethics. More specifically, this subject matter will discuss the actions of Hank Paulson. The paper will also focus on the global image of Goldman Sachs in respect to countries such as China, Brazil, Japan, and Greece. This analysis will provide proof on how Goldman Sachs abused its power and violated investment trust laws with misleading informations and number to mask the truth in order to benefit the company itself.

Lastly, while all of these issues were prevelant in other investment banking firms, the specific actions taken by Goldman Sachs proved successful and detrimental for the firm. This paper will analyze those actions and the political