Goldman Sachs faces a bleak future and will give away its market share to smaller rivals, said analyst Meredith Whitney.
“They're going to lose market share and small players will gain market share. The momentum has clearly been taken away from Goldman,” says Whitney, CEO of Meredith Whitney Advisory Group.
The banking giant’s brand has been tarnished and investors should not buy the stock, she told CNBC.
The U.S. government alleges that Goldman withheld information to its investors about a group of securities which were backed by subprime mortgages.
Goldman could come out of this debacle exonerated and still not survive the massive damage, Whitney said.
“It gives a lot of hobbled governments ammunition to go after what is the only scapegoat right now. Whether they're proven guilt or not, now they're being forced to play defensive,” she said.
But Goldman still has some high-profile, and very wealthy, fans.
Berkshire Hathaway CEO Warren Buffett recently said he has no plans to sell his company's stake in Goldman as the investment bank fights civil fraud charges.
Buffett and Berkshire's vice chairman, Charlie Munger, both praised Goldman at Berkshire's recent shareholder meeting.
Both executives said they're happy with Goldman CEO Lloyd Blankfein's leadership. And they don't view the Securities and Exchange Commission's charges against Goldman as a strike against Blankfein.
Buffett has been one of Goldman's biggest supporters before and since the SEC filed its civil lawsuit against the bank on April 16. The government charged that the investment bank misled investors about a deal involving complex mortgage-related investments that later plunged in value.
Munger noted that the SEC vote to file the charges was 3 to 2. He said that if he had been a member of the SEC, he would have voted against the suit.
"There are plenty of CEOs I'd like to see gone in America, and Lloyd Blankfein is not one of them," Munger said.
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