Goldman Sachs, an investment bank that has been around for 154 years, has recently had problems and lost its position as the top Wall Street bank. Morgan Stanley’s market value is $42 billion more than Goldman Sachs’s, and Goldman Sachs CEO David Solomon was paid 29% less than Morgan Stanley’s CEO. There have also been rumours that morale is low at the company after Solomon recently fired 6% of the global workforce and admitted that the bank’s plan to focus on Main Street customers and commercial banking products failed.
The Rise and Fall of an American Icon is a book he wrote about his time as an investment banker. William Cohan has told Goldman Sachs’s CEO and board of directors how to get back on track. He thinks that the first step is to improve the bank’s balance sheet so that it can compete with other big banks like JPMorgan Chase and Bank of America. Cohan suggests that Goldman Sachs merge with Bank of New York Mellon, which is a commercial bank that doesn’t want to be an investment bank. This bank does business in 35 countries and has a lot of assets that it manages and holds. Robin Vince, the CEO of Bank of New York Mellon, worked for Goldman Sachs for 26 years, which makes the merger a good fit for both companies.
But there are some problems with this planned merger. As its poor track record shows, Goldman Sachs could have been better at making acquisitions in the past. Since the financial crisis of 2008, the US Federal Reserve, which is in charge of making sure Goldman Sachs is acting responsibly, has not allowed any horizontal acquisitions in the banking sector. Also, Wall Street, in general, and Goldman Sachs, in particular, have problems with staff morale.
Cohan tells David Solomon, the CEO, that he should do things to boost the morale of his employees. He suggests Solomon give up his private jets and hobbies and start giving his staff free coffee, tea, and pastries. He thinks these simple steps will help make the workplace a happier and more fun place to work and make the employees feel better about themselves.
Goldman Sachs needs to do something to get back to being the best investment bank on Wall Street. William Cohan suggests that the company merge with the Bank of New York Mellon, which is a commercial bank that doesn’t want to be an investment bank. Goldman Sachs will be able to get cheap financing and grow its assets in wealth management, deposits, and Wall Street back-office operations. CEO David Solomon could also boost morale by giving up his private jets, stopping his extracurricular activities, and giving out free coffee, tea, and snacks again.
