- If you are curious about the history, culture, and future of Goldman Sachs, one of the most influential and controversial financial institutions in the world, you might want to read this book review of [RIP Goldman Sachs: When I started out at Goldman, it was the most feared firm on Wall Street. Those days are gone for good] by [Bethany McLean].
- To learn more about the book and its insights and implications for the financial sector and the global economy, please continue reading the rest of the article. You will find a summary and review of the book, as well as some suggestions for further reading and resources.
Table of Contents
Recommendation
In investment banking, the Goldman Sachs brand exuded bravado, confidence and superiority. Goldman always seemed one step ahead of the competition; its alumni served in institutions and governments around the world. But since the 2008 financial crisis, stakeholders believe the brand has lost its luster. Journalist and former Goldman analyst Bethany McLean weaves a detailed narrative about the challenges senior leaders face to right the Goldman ship. Investors, executives and financial professionals will find this an insightful examination of a storied firm.
Take-Aways
- Goldman Sachs CEO David Solomon seeks to revitalize the illustrious firm after a decade-long malaise.
- Solomon’s efforts have produced a mixed bag of wins and losses.
- Many employees resisted changes at Goldman and left, fueling a talent drain.
Summary
Goldman Sachs CEO David Solomon seeks to revitalize the illustrious firm after a decade-long malaise.
In 2018, David Solomon became CEO of the legendary investment banking firm. He focused on revitalizing the brand, which has stagnated since the Great Recession. Under the leadership of Solomon’s predecessor, Lloyd Blankfein, company income had deteriorated: In 2018, revenues were lower than 2010’s revenues.
“The sense that Goldman was no longer invincible didn’t start under David Solomon’s watch, but it has clearly accelerated.”
Goldman’s dramatic decline, particularly relative to the performance of its investment banking peers, contrasts sharply with its halcyon days, when observers considered the organization as the “greatest wealth-creation machine the world had ever known.” Goldman has faced adversity in its history, including a near brush with closure in the 1970s and a 1990s debacle tied to partners exiting the firm, which weakened operational effectiveness. Yet Goldman always reemerged as the preeminent investment bank.
Solomon’s efforts have produced a mixed bag of wins and losses.
As Solomon completed five years as CEO in 2023, many stakeholders – including Blankfein and other executives – viewed his tenure as a failed enterprise. A cornerstone of Solomon’s vision to reenergize Goldman involved expanding the bank’s fledgling consumer and retail business. The operation ended up hemorrhaging $3.8 billion through its lifecycle, and so Solomon closed the business. Solomon has stated publicly that his detractors inside the organization are causing serious harm to the brand, which makes the job of reviving the firm much more difficult.
“Nor did Solomon do himself any favors with his disastrous attempt to imitate Morgan Stanley all these years later, catering to consumers, but in Goldman’s case by offering everything from checking accounts to credit cards.”
Solomon must resuscitate the stock price, which has languished since 2008, as well as mitigate the erosion of market share to competitors in multiple service lines. Despite the critics, and to his credit, Solomon has generated successes: The company has remained, over 20 consecutive years, the globe’s leading M&A firm. He has worked diligently – at the direction of the board of directors – to restructure the company to operate as a corporate entity, as opposed to its roots as a partnership. Solomon also ended the Goldman legacy of holding its own investment portfolio by selling $60 billion in proprietary assets.
Many employees resisted changes at Goldman and left, fueling a talent drain.
Solomon’s changes caused friction with many Goldman professionals; more than 200 partners have exited Goldman since he took over. Solomon’s tenure has proven to be disruptive, with outcomes both positive and negative. The retail and consumer strategy cratered, but over the five years of Solomon’s term, Goldman’s stock value jumped 50%, and return on equity has accelerated.
“Ultimately, it’s the market that will determine how Solomon’s legacy is viewed.”
Given the firm’s history of revival followed by success, many believe Goldman will survive this most recent upheaval. However, the Goldman of tomorrow will bear scant resemblance to the Goldman of prior decades.
About the Author
Special correspondent at Insider Bethany McLean is a contributing editor at Vanity Fair.
Genres
business, finance, history, journalism, memoir, biography, investigation, criticism, commentary, sociology
Review
The book is a personal and investigative account of the rise and fall of Goldman Sachs, one of the most powerful and prestigious investment banks in the world. The author, Bethany McLean, is a former Goldman analyst and a renowned financial journalist who has covered the firm for decades. She traces the history of Goldman from its humble beginnings as a family business to its peak of dominance and influence in the global financial system.
She also exposes the internal conflicts, scandals, and mistakes that have eroded the firm’s reputation and performance in recent years. She reveals how the firm’s culture, leadership, and strategy have changed under the current CEO, David Solomon, who has faced criticism and resistance from his own partners and employees. She argues that Goldman has lost its edge, its mystique, and its identity, and that it is no longer the most feared firm on Wall Street.
The book is a compelling and insightful read that offers a rare insider’s perspective on Goldman Sachs. McLean combines her personal experience, extensive research, and interviews with current and former Goldman executives, clients, regulators, and competitors to paint a vivid and nuanced picture of the firm. She writes with clarity, candor, and humor, and she does not shy away from asking tough questions and challenging conventional wisdom.
She balances praise and criticism, and she acknowledges the firm’s achievements and contributions, as well as its flaws and failures. She also provides a broader context and analysis of the changes and challenges facing the financial industry and the global economy. The book is not only a fascinating story of Goldman Sachs, but also a reflection on the role and responsibility of finance in society.