Monday, 25 January 2010

Why Goldman will want a lower profile going forward.

The following graphic which can be found at the FT Alphaville site and which originated from work by a Reuters analyst shows how especially vulnerable Goldman Sachs is to the recently announced initiative to place restrictive regulations on prop trading. Pictorially it also shows how likely it could be that GS will want to return to being a private company, out of the spotlight, away from the FDIC, and with a new lower profile CEO who manages to keep his photo off the front pages of the mainstream press.

Even if some of the GS business conducted is client related, the fact that the government will be monitoring the segregation between true prop trading and that conducted for clients will help to keep GS under wraps.

If the powers that be decide that GS should be reincarnated again as a private entity then buying out the public would be more advantageous to the existing directors of the company, Warren Buffet and other GS alumni, if the price they had to pay was a lot cheaper than it is at present.

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