emma rocks

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Goldman CEO Lloyd Blankfein and his colleagues don’t seem to get this question of social license. Courts of law may ultimately vindicate the firm, but it could be irreparably damaged by evidence and public outrage anyway. During their recent congressional testimony, Goldman executives took pains to note that Goldman wasn’t acting as an adviser when it peddled those crappy CDOs to the unfortunate German banks. It was simply making a market in securities, finding people who wanted to sell them and people who wanted to buy them. Customers should have no reasonable expectation that Goldman isn’t selling them junk, they argued.

That may technically be true for market-making or trading operations, but that’s not all Goldman does. Goldman makes most of its revenues from trading on its own accounts, but it made its name, and established its brand, in investment banking and asset management, two businesses that depend almost entirely on customers thinking they are getting good advice and treatment.

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Gross, on Goldman and the question of social license.  (via newsweek)