NEW YORK - For years, you were golden if you hired someone from Goldman Sachs.
Alumni of the Wall Street firm have advised presidents from both parties, taken high-profile Cabinet posts, run big businesses and been involved in multimillion-dollar philanthropies.
But recent missteps have challenged the notion that Goldman only breeds winners.
Henry Paulson, who was criticised for mishandling the first incarnation of the bank bailout, is a Goldman alum. So is John Thain, who rushed billions of dollars in bonuses to Merrill Lynch employees before the investment bank had to be sold.
Also a Goldman vet: Robert Rubin, the treasury secretary under former President Bill Clinton who resigned from his senior advisory role at Citigroup last month after being criticised for missing the warning signs of the financial crisis.
Those names have lent a rare tarnish to a firm sometimes called the New York Yankees of Wall Street.
‘When you become a partner at Goldman, you are supposed to be the master of the universe,’ said Ed Yardeni, who runs his own investment consulting firm and is a well-known Wall Street economist - and himself was turned down years ago for a Goldman job.
‘That meant you could run the greatest investment bank on earth, but it turns out that skill set doesn’t always translate to the White House, Treasury or other Wall Street firms,’ Mr. Yardeni said.
Goldman draws its talent from the top students from the best universities and business schools. Those given a chance to embark on Goldman’s recruiting gantlet encounter job interviews in which they are asked not just complex questions about finance but simply why they deserve to be at Goldman.
And just like the Yankees, Goldman employees are well-paid. Its 30,000 employees last year made more than US$355,000 on average, including salaries, bonuses and benefits. The average at rival Morgan Stanley was about US$250,000 (S$375,000).
Those given the coveted title of managing director - who are considered partners - can pull in seven figures. But flashing wealth runs against the Goldman culture, and employees, dubbed ‘billionaire Boy Scouts,’ are expected to give to charity or perform public service.
‘Does the firm create exceptional talent, or does exceptional talent create a truly great firm? I think the vast majority of ex-Goldman employees want to believe it’s a little bit of both,’ said Janet Hanson, a 14-year Goldman veteran who went on to found a money management firm and the global women’s networking group 85 Broads.
Teamwork, integrity, accountability and collegiality are other prominent parts of the Goldman ethos, said Charles Ellis, author of ‘The Partnership: The Making of Goldman Sachs.’ That breeds loyalty not seen at other Wall Street firms.
For instance, the firm uses an evaluation system in which each employee is graded by everyone he or she works with. So low-level workers get to weigh in on their bosses.
Goldman survived the financial meltdown last fall, but not without help. It took US$10 billion from the government’s Troubled Asset Relief Programme, or TARP. It also received a US$5 billion investment from Warren Buffett’s Berkshire Hathaway that came with a strong endorsement from Mr. Buffett.
That helped to stabilise Goldman but couldn’t stop the bleeding.
From September through November, it lost US$2.3 billion - the first quarterly loss since Goldman went public in 1999. CEO Lloyd Blankfein is forgoing a bonus for 2008.
Still, Goldman made it out alive. That’s more than can be said for three of its former fellow investment banks - Lehman Brothers, Bear Stearns and Merrill Lynch - none of which survived the meltdown as an independent firm.
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Goldman’s reputation tainted
AP
17 February 2009
NEW YORK - For years, you were golden if you hired someone from Goldman Sachs.
Alumni of the Wall Street firm have advised presidents from both parties, taken high-profile Cabinet posts, run big businesses and been involved in multimillion-dollar philanthropies.
But recent missteps have challenged the notion that Goldman only breeds winners.
Henry Paulson, who was criticised for mishandling the first incarnation of the bank bailout, is a Goldman alum. So is John Thain, who rushed billions of dollars in bonuses to Merrill Lynch employees before the investment bank had to be sold.
Also a Goldman vet: Robert Rubin, the treasury secretary under former President Bill Clinton who resigned from his senior advisory role at Citigroup last month after being criticised for missing the warning signs of the financial crisis.
Those names have lent a rare tarnish to a firm sometimes called the New York Yankees of Wall Street.
‘When you become a partner at Goldman, you are supposed to be the master of the universe,’ said Ed Yardeni, who runs his own investment consulting firm and is a well-known Wall Street economist - and himself was turned down years ago for a Goldman job.
‘That meant you could run the greatest investment bank on earth, but it turns out that skill set doesn’t always translate to the White House, Treasury or other Wall Street firms,’ Mr. Yardeni said.
Goldman draws its talent from the top students from the best universities and business schools. Those given a chance to embark on Goldman’s recruiting gantlet encounter job interviews in which they are asked not just complex questions about finance but simply why they deserve to be at Goldman.
And just like the Yankees, Goldman employees are well-paid. Its 30,000 employees last year made more than US$355,000 on average, including salaries, bonuses and benefits. The average at rival Morgan Stanley was about US$250,000 (S$375,000).
Those given the coveted title of managing director - who are considered partners - can pull in seven figures. But flashing wealth runs against the Goldman culture, and employees, dubbed ‘billionaire Boy Scouts,’ are expected to give to charity or perform public service.
‘Does the firm create exceptional talent, or does exceptional talent create a truly great firm? I think the vast majority of ex-Goldman employees want to believe it’s a little bit of both,’ said Janet Hanson, a 14-year Goldman veteran who went on to found a money management firm and the global women’s networking group 85 Broads.
Teamwork, integrity, accountability and collegiality are other prominent parts of the Goldman ethos, said Charles Ellis, author of ‘The Partnership: The Making of Goldman Sachs.’ That breeds loyalty not seen at other Wall Street firms.
For instance, the firm uses an evaluation system in which each employee is graded by everyone he or she works with. So low-level workers get to weigh in on their bosses.
Goldman survived the financial meltdown last fall, but not without help. It took US$10 billion from the government’s Troubled Asset Relief Programme, or TARP. It also received a US$5 billion investment from Warren Buffett’s Berkshire Hathaway that came with a strong endorsement from Mr. Buffett.
That helped to stabilise Goldman but couldn’t stop the bleeding.
From September through November, it lost US$2.3 billion - the first quarterly loss since Goldman went public in 1999. CEO Lloyd Blankfein is forgoing a bonus for 2008.
Still, Goldman made it out alive. That’s more than can be said for three of its former fellow investment banks - Lehman Brothers, Bear Stearns and Merrill Lynch - none of which survived the meltdown as an independent firm.
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