It has to be a matter of time before Goldman Sachs clients start heading for the door, fed up with the company's duplicity and double dealing.
Goldman Sachs is now being sued by the Securities and Exchange Commission for selling a derivative to investors, telling them it was a great investment, while shorting or betting against it. It's also facing potential criminal charges.
But as the New York Times tells us, this was all standard business practice for Goldman. For example, it sold securities in its long time client Seattle-based Washington Mutual while other Goldman traders were placing big bets that the stock would crash. It had also wagered against Bear Stearns and Countrywide Financial, two longstanding clients of the firm and bet against the American International Group, which insured Goldman's mortgage bonds, and another client in National City, a Cleveland bank the firm had advised on a sale of a big subprime mortgage lender to Merrill Lynch. No wonder the New York Times reports that Goldman Sachs clients are starting to get edgy.
Goldman Sachs has always claimed to put the clients interests first. But documents before the Senate subcommittee on investigations show what they claim and what they do are two different things. The firm's own documents reveal that putting the clients is not that simple. "Our first business principle states that:Our Clients' Interest Always Come First. However, this is not always straight forward as we are a market maker to multiple clients."
Speaking with a forked tongue is just the Goldman Sachs business model. Duplicity is the Goldman Sachs way, making the firm enormous profits.
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