So in the last couple of days, we’ve learned that almost EVERYONE on Wall Street is under some kind of investigation.
In the last couple days, news of probes into Morgan Stanley (MS), Citigroup (C), JPMorgan (JPM), Bank of America (BAC) and others has come out.
Everyone from the SEC to the Manhattan DA to the Attorneys General of Connecticut and New York want to take a stab into looking at pre-crisis behaviour at the major banks.
Among the big-time firms, so far only Goldman Sachs (GS) has seen charges brought against it, but we’re now sure we’ll see more action. There’s too much smoke for there not to be fire.
So who wins in all this?
That’s right. Goldman. Think about it, barring some actual criminal conviction (and remember, there aren’t even criminal charges against it), the only way these charges will REALLY damage the firm is by hitting its reputation. And no, we’re not talking about whether readers of the New York Times think Goldman is seedy. That’s not that important.
We’re talking about whether real clients of the firm lose confidence in the firm. And that seemed possible a few weeks ago, but now we’re thinking that’s impossible.
If everyone is guilty, nobody is guilty. Well, that principle doesn’t apply in a legal sense, but we think it applies in a reputational sense. There’s no good reason to leave Goldman for some other firm, if in the end their behaviour was very similar.
Once again, the government bails out Goldman Sachs.