Goldman Sachs Group - Essay Example

Goldman Sachs emerged in 1869 when founder Marcus Goldman founded the company; his son-in-law Samuel Sachs would join the organization in 1885, giving the company its modern moniker. In this early incarnation, the company primarily functioned as a commercial paper manufacturer for entrepreneurs. They were highly successful and joined the New York Stock Exchange (NYSE) in 1896 (Lindskoog). In the early 20th century the company moved into the financial market, a path that would come to characterize the organization.

Their first substantial contributions to this market were in terms of managing initial public offerings (IPOs). For instance, they managed the Sears, Roebuck and Company IPO in 1906 (Lindskoog). At the time this was the largest market IPO that had occurred on the NYSE. The next great shift in the company occurred in 1930 when Stanley Weinberg joined the organization. Weinberg’s major contribution was shifting the company emphasis from trading and more into the field of investment banking. While Goldman had suffered a hit in reputation during the 1929 stock market crash, Weinberg had worked to restore much of the company’s brand.

One considers a similar parallel with the 2008 economic recession (Lindskoog). . In 1990 future Treasury Secretary under the Clinton administration Robert Rubin joined the firm. In 1994 he would leave and Jon Corzine would assume leadership; Corzine was proceeded by Henry Paulson, another former Treasury Secretary (Lindskoog). In 1999 the company issued its own IPO, releasing 48% of its stock publicly. Still, the most notable elements of the company occurred in the 2007-2008 subprime mortgage crisis.

During this period the company profited on the collapse in subprime mortgages by short-selling subprime mortgage backed securities; this garnered significant questions of ethics (McGee). Still, the company experienced significant financial hardship during the recession and received over $10 billion in government bailout (McGee). The company has a large variety of financial products and services. In its contemporary incarnation the company has three main divisions: investment banking, asset management and securities services, and trading and principal investments (Cohan).

The investment banking division involves financial advising; such practices include mergers and acquisitions, restructuring, and avoiding hostile. They also participate in underwriting public offering and private placements of equity. Another division is asset management and securities service. The asset management division offers investment advice and financial planning (Cohan). The securities service includes clearing, financing, custody, and securities lending. The third division is the trading and principal investment division.

This is understood as the most developed of the organization’s divisions and operates as the organization’s greatest source of profit (Cohan). This division is divided into the further subsections of fixed income, currency,