Goldman Sachs Group Inc. is a bank holding company and global investment banking, securities and investment management firm based in New York. Long a dominant Wall Street commodity dealer, it also is a big player in trading, merchant banking and asset management. The legendary investment bank transformed itself into a bank-holding company after the 2008 Lehman collapse to gain access to TARP cash reserves, but it repaid the $10 billion it received.
Goldman's much-vaunted culture is marked by competition, a strong work ethic and teamwork. And top results have meant supersize pay for the industry. But its sterling reputation is being tarnished by a U.S. Securities and Exchange Commission suit alleging that the bank committed fraud in connection with a sale of a synthetic CDO that later blew up on investors.
Few firms can boast Goldman's glittering alumni roster. Among the more notable names: former U.S. Treasury secretaries Henry Paulson and Robert Rubin, New Jersey Gov. Jon Corzine, former Merrill head John Thain, and TheStreet.com founder Jim Cramer. The company is increasingly sensitive to criticism about receiving favoritism in the federal bank rescue, particularly from Paulson, prompting some detractors to refer to it as "Government Sachs."
The bank came through the credit crisis in better shape than most, prompting a mini industry in Goldman conspiracies, perhaps best crystallized in Rolling Stone magazine's now-famous characterization of the firm as "a great vampire squid wrapped around the face of humanity." The firm has come under withering criticism for its pay policies and perceived arrogance, according to The Wall Street Journal. But it also made $500 million in charitable contributions in 2009. In becoming a bank-holding company, Goldman is expected to take fewer risks, putting limits on leverage and some of the strategies that had once reaped handsome profits for the company such as trading, merchant banking and commodities.
Goldman's relatively small size has helped the firm cultivate a meritocracy that frowns on egotism and prizes teamwork. The firm is known for inspiring fierce loyalty but has its limits. It cut 10% of its staff in 2008.
Goldman showed restraint in compensation in 2009, despite a blowout earnings year and took money out of the bonus pool for charity. Employees were paid an average of $500,000 in pay and benefits in 2009. In lieu of cash bonuses, the top 30 executives received stock that must be held for at least five years and is subject to clawback if the exec fails to properly account for risk. The company had London partners bear the brunt of a new temporary U.K. tax on bonuses, capping salaries and bonuses £1 million ($1.61 million). Certain employees will be allowed to borrow from the firm to relieve personal cash crunches but loans aren't forgivable and aren't bargains.
Before interviewing, you might want to browse the Pultizer-prize winning "Lords of Finance," by Liaquat Ahamed, which was named Business Book of the Year 2009 by Goldman Sachs and the Financial Times. "When Markets Collide," by PIMCO's Mohamed El-Erian was 2008's pick.
The firm recently moved its lower Manhattan headquarters from 85 Broad to 200 West St. The new spot has six football-field-sized trading floors, but only 300-odd elite partners get offices with windows. Vice presidents are relegated to open-space workbenches, while managing directors' at least have offices, albeit without windows.
Love your cell phone? Hang it up. Talking about confidential business on cell, cordless and speaker phones is verboten since hobbyists and information brokers may be listening in. Goldmanites also are cautioned to use the greatest of care when working on confidential documents on planes, trains, subways or buses or when discussing confidential matters in elevators, taxis, limos and at parties. If you must talk shop in such places, speak in code.