Goldman Sachs - Wikipedia
WASHINGTON — Reversing its oft- repeated position that it was acting only on behalf of its clients in its exotic dealings with American. Goldman Sachs collected $ billion from the American International Group as payout on a speculative trade it placed for the benefit of its own. Goldman charged more than AIG for the protection, so it was able to pocket the difference, making millions while moving the default risks to AIG.
InLevy took over as Senior Partner from Weinberg, and built Goldman's trading franchise once again. It is Levy who is credited with Goldman's famous philosophy of being "long-term greedy", which implied that as long as money is made over the long term, trading losses in the short term were not to be worried about.
At the same time, partners reinvested almost all of their earnings in the firm, so the focus was always on the future. The bankruptcy was large, and the resulting lawsuits, notably by the SECthreatened the partnership capital, life and reputation of the firm.
Under the direction of Senior Partner Stanley R. Miller, it opened its first international office in London in and created a private wealth division along with a fixed income division in It also pioneered the " white knight " strategy in during its attempts to defend Electric Storage Battery against a hostile takeover bid from International Nickel and Goldman's rival Morgan Stanley. Weinberg the son of Sidney Weinbergand John C.
Goldman defends its collateral calls to AIG | Reuters
Whitehead assumed roles of co-senior partners inonce again emphasizing the co-leadership at the firm. One of their initiatives  was the establishment of 14 business principles that the firm still claims to apply. Aron was a player in the coffee and gold markets, and the current CEO of Goldman, Lloyd Blankfeinjoined the firm as a result of this merger.How Goldman Sachs Survived
In it underwrote the public offering of the real estate investment trust that owned Rockefeller Centerthen the largest REIT offering in history.
In accordance with the beginning of the dissolution of the Soviet Unionthe firm also became involved in facilitating the global privatization movement by advising companies that were spinning off from their parent governments. Inthe firm formed Goldman Sachs Asset Management, which manages the majority of its mutual funds and hedge funds today. During the s the firm became the first bank to distribute its investment research electronically and created the first public offering of original issue deep-discount bond.
During their reign, the firm introduced paperless trading to the New York Stock Exchange and lead-managed the first-ever global debt offering by a U.
InGoldman financed Rockefeller Center in a deal that allowed it to take an ownership interest  inand sold Rockefeller Center to Tishman Speyer in Blankfein was promoted to Chairman and Chief Executive Officer. Two Goldman traders, Michael Swenson and Josh Birnbaum, are credited with being responsible for the firm's large profits during the crisis.
By summerthey persuaded colleagues to see their point of view and convinced skeptical risk management executives.
AIG has 'contentious relationship' with Goldman Sachs | Business Insurance
The firm's viability was later called into question as the crisis intensified in September On October 15,as the crisis had begun to unravel, Allan Sloana senior editor for Fortune magazine, wrote: The insurance giant wrote trillions of dollars worth of these policies during the real estate boom without setting aside sufficient cash to cover losing bets, positioning itself for potential catastrophic losses.
According to the crisis commission report, Goldman bought credit default swaps from AIG as a form of insurance on investments known as Abacus, which were pools of mortgage-linked securities. One such pool put Goldman cross-wise with federal regulators: Goldman sold the same investments to other clients--mostly European banks--without disclosing their provenance, according to the SEC's lawsuit.
The crisis panel did not disclose whether this Abacus deal was among those on which Goldman collected a portion of the AIG bailout funds. The AIG bailout, which paid holders of its insurance policies cents on the dollar, was aggressively defended by federal regulators as a critical immunization against a potential financial pandemic as the insurance company teetered on the verge of collapse in the fall of Treasury Secretary Timothy F.
Geithner, who led the New York Fed at the time the AIG rescue was crafted, later told Congress that a collapse risked "large and unpredictable global losses with systemic consequences--destabilizing already weakened financial markets, further undermining confidence in the economy, and constricting the flow of credit.
Goldman Sachs Got Billions From AIG For Its Own Account, Crisis Panel Finds
Analysts say such fears caused the officials who crafted the bailout to lean heavily toward speed and size, while failing to factor in fairness. In reality, she contends, those fears were overblown: There was ample money in the financial system. Rather, individual institutions did not have enough cash on hand to survive their losses, she asserts. But the fear of a broader liquidity crisis was used as justification for what now appears to have been a backdoor means of bailing out Goldman, said Rutledge.