Goldman Sachs has “lost its Midas touch” as the world’s leading investment bank, as the competition has caught up quickly in the midst of the worldwide economic downturn during the last year, writes financial journalist Charlie Gasparino in his column on The Daily Beast.
“The PR spin out of Goldman Sachs these days—just as the firm is about to redistribute billions of taxpayer bailout money in the form of year-end bonuses—is that the firm is once again very solid,” writes Gasparino.
“The traders are making money, and Goldman’s famed ‘client’ or investment-banking business, which manages the investment needs of the world’s biggest companies, hasn’t been touched, the people at Goldman assure me. Big companies are still flocking to Goldman’s investment bankers to sell stock or for advice on mergers and acquisitions. But don’t bet on it,” adds Gasparino.
Goldman faces stiffer competition from J.P. Morgan, and Morgan Stanley, which, are now rivaling Goldman in the business of underwriting stocks for major companies, according to the latest statistics from Dealogic.
“These deals are important because they represent Wall Street's real growth businesses: Banks have been issuing stock in massive numbers this year both to repair their toxic-debt-ridden balance sheets, but also to repay government bailout money,” writes Gasparino.
“J.P. Morgan CEO Jamie Dimon wisely steered his firm clear of the subprime crisis and is considered one of the most respected CEOs in corporate America, which carries its own cachet. Moreover, J.P. Morgan simply has more resources to offer clients than Goldman, such as a massive balance sheet of bank deposits.”
Gasparino writes that Goldman now symbolizes the “unholy relationship” between big government and Wall Street, which gets bailouts with taxpayer funds and then earns billions of dollars in profits.
To combat this growing perception, Bloomberg News reports, Goldman is now talking with investors about its executive pay packages.
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