What Is Goldman Sachs?:
Founded in 1869, Goldman Sachs is a leading global investment bank with over 26,000 employees worldwide and earnings of over $11 billion in 2007. It is most known for its investment banking business, in which it helps companies, cities and foreign governments raise money through issuing stocks or selling bonds. However, two-thirds of its income is from trading and offering investment advice on stocks, bonds, commodities and other financial products. Finally, it manages the investment portfolios of wealthy individuals, companies and governments.
Why Is Goldman Sachs Important to the U.S. Economy?:
Goldman Sachs is one of the most aggressive investment banks on Wall Street. In the 1980's, it put together the largest deals of that time, including the initial public offerings (IPO's) of the Real Estate Investment Trust that owned Rockefeller Center, the Microsoft IPO, and General Electric's acquisition of RCA. In the 1990's, it brokered the IPO's of Yahoo! and NTT DoCoMo. It introduced paperless trading to the New York Stock Exchange (NYSE), brokered the first-ever global debt offering by a U.S. corporation and launched the Goldman Sachs Commodity Index. (Source: Wikipedia, Goldman Sachs)
Goldman Sachs Launches U.S. Leaders:
Goldman is a highly competitive place to work, but those who make it become leaders throughout business and government. Its alumni include: Treasury Secretary Henry Paulson; Citigroup Chairman and prior Treasury Secretary Robert E. Rubin; Bank of Italy Governor Mario Draghi; New Jersey Governor Jon Corzine, White House chief of staff Joshua Bolten; and Merrill Lynch President and former New York Stock Exchange Governor John Thain. This means that Goldman's reach extends far beyond its business and into the highest levels of government. (Source: NYT, Goldman's Shadow Extends Far Beyond Wall Street)
Why Did Goldman Sachs Become a Bank Holding Company?:
On September 21, 2008, Goldman applied to the Federal Reserve to become a bank holding company. This allows it to take deposits like a commercial bank, allowing it to be less reliant on raising capital in the bond market. It will also be regulated by the Federal Reserve, which gives it access to the Fed's discount window. All of these measures make Goldman seem like a safer investment to stockholders, who had driven down the company's share price as a result of the Banking Crisis. (Source: Bloomberg, Goldman, Morgan Bring Down End to an Era, September 22, 2008)
