Why is Goldman Sachs so Successful?

All are investment banks. But in the financial crisis, Bear Stearns collapsed. Merrill Lynch fell. Lehman Brothers helplessly died. Morgan Stanley struggled. Only Goldman Sachs was able to maintain growth and profits. Why did Goldman fare so differently from other banks?

Let the time trace back to the end of 2006, before the crisis exploded. On 85 Broadway Avenue Goldman headquarter, Goldman CFO David Viniar called various department, and the urgent convention took the issue of "collateral risk" as the subject of the conference. Goldman used the risk management pattern. The average must collect 25,000 data to come the risk test every day. When secondary debt risk was not yet in full exposition, the risk system had sent out the early warning signal. In careful examination of investment portfolio by other managers together, Viniar decided immediately to adopt the strategy of short selling real estate. After the meeting, Goldman reduced the mortgage loan related bond one after another, simultaneously and purchased the high quota the insurance. Proved afterward that this act not only let Goldman avoid being involved in the Wall Street disaster, but also enabled it to become a Wall Street bright spot.

We must know that looks even though Goldman had hundred years management history, once was one had many weakness. Merely in the wholesale trading, the commercial bill as well as in risk arbitrage these three independent businesses had the comparative strength. Once in many investments and decision-making made a mistake, and paid the soaring price the family firm, can develop in the world finally the most famous investment bank and modern financial industry giant. It is almost impossible that their success depended only on luck.

Another viewpoint believes that Goldman has more conservative enterprise culture and keen risk warning mechanism. The excellent risk system initially was built in 1995. The core is the internal regulatory committee. Holds the teleconference every Wednesday, inspects the company all big risk projects, including market risk, operation, credit, new tool and service and company prestige. This risk management department and transaction department are equally important. The transaction must accept and through the risk management monitoring of department. The excellent risk system is a secret weapon - - 1100 people of risk department and each one is an outstanding person.

Actually earliest history of Goldman may be traced back to 19th century's ends. Quite a lot of founders were the 19th century 30's, the 40's immigrants and the German Jews in US. Solomon Brothers and Lehman Brothers and Goldman are outstanding people. One to two most renowned partners was managing the entire company. This system enables minority outstanding to become a company and even one time representative personally, reflecting the financial business based on the interpersonal relationship and credit essence and characteristic..

The sense of belonging is the forming a partnership system's biggest merit. The staff raised over the years out work has company's intense loyal feeling. But becoming the partner means lifelong hires. Almost nobody will give up this winning the respect the status to join other companies. The partner will attend the wedding ceremony and funeral such family activities, and "flat organization" shares all information in this. Changing job in the 1960s non-partner's ordinary staff member continually is also very rare. Winning over a popular actor from another company by offering higher pay is almost one immoral behavior. Now in Goldman, the staff a time partner will select two years regards as elects the president to be equally earnest likely. Election was for 7 months. 24,000 staffs want to become in 1200 intermediate decks, but 1200 people each one wants to become one of 300 partners. But these 300 people, with yearly salary over 600,000 US dollars, may also participate in the company drawing bonus. This mechanism's characteristic, had guaranteed well all excellent staffs profits and diligently, at the same time carries on to the common interest supervised highly.