Self-improvement, Goldman Sachs-style
Goldman Sachs is promising to change some of its business practices after a lengthy internal review of its operations.
A business standards committee has spent the last eight months combing through the bank's worldwide operations and came up with 39 recommended reforms that were laid out in a 63-page report released Tuesday morning.
The internal review was initiated after the company was sued by government regulators in April and accused of misrepresenting a deal to clients in the run-up to the financial crisis. After facing a barrage of public criticism, the company settled with the government in July by paying a $500-million fine.
The committee recommended that the firm report some of its financial results differently, and that it use different teams to structure the type of financial products that led to the government lawsuit.
Most of the reforms, though, will not lead to specific changes to the company's core operations and are likely to disappoint the critics of the company who have called for a bolder remaking of the firm.
"It's a number of minor changes -– that’s basically the way I look at it," said Jim Sinegal, a bank analyst at Morningstar.
The company described the review as "significant, encompassing every major business, region and activity of the firm." But the report also described the changes as a strengthening of current company principles rather than a reorientation or rewriting of those principals.
"We believe the recommendations of the Committee will strengthen the firm's culture in an increasingly complex environment," the report said.
Goldman has been one of the most successful firms on Wall Street. Its ability to survive and even thrive during the financial crisis attracted attention to the conflicts of interest between the company's trading and investments and those of its clients.
In the clearest effort to address those conflicts, the company will now report in greater detail in its financial reports on the revenues it brings in by trading and investing on its own behalf.
The public presentation of the report -- including a video presentation by the firm's chief executive, Lloyd Blankfein -- is clearly aimed at improving the company's public reputation, which has been severely tested. Sinegal said the report could provide a publicity boost but may not be enough.
"We'll see if it ends up being too little too late," Sinegal said. "There's already a lot of backlash. They have a pretty big bull's-eye on their backs."
-- Nathaniel Popper in New York