Goldman Sachs is one of the most influential investment banks in today’s world. But the question that surrounds is success today is that whether the path chosen to this triumphant position, in line with the legality and ethicality expected to observe in the business world? Does Goldman follow the principles outlined by the company itself? The answers to these questions appear to be blurring when we try to analyse the Goldman Sachs Abacus 2007– ACI Controversy. There are a lot of questions that have been left unanswered. But the lack of proof against Goldman with respect to misrepresenting their long-term clients or ACA about the tenure of the position that Paulson was taking. However, Goldman’s decision to go for an out of court settlement
…show more content…
Something that came out of the investigations very clearly was the fact that Goldman never created a clear picture to ICA, IKB or any of their clients regarding Paulson’s role in selection of the abacus portfolio. Goldman constantly maintained a negative outlook on the housing sector but was still more than willing to sell the opposite position on a portfolio which was primarily selected by Paulson who firmly believed that the portfolio would …show more content…
The fact that company allowed and promoted to their clients a portfolio they believed would fail, and did not share this information with their clients pose a question mark on the ethical aspect of its behaviour. The banking sector is considered to play a key role in economic development. It helps to translate someone’s savings into someone’s investment. Thus, the money involved in the Abacus deal, i.e., the money put in by Paulson, IKB and ICA should have been invested further to spread the benefits across all parties that were involved. But the deal only focussed on benefitting Paulson and everyone else was left empty handed. The question about picking the right RMBSs is completely ruled out because of the fact that Goldman allowed some clients to suffer with improper knowledge, knowing the fact that the housing market was set to fail. A bubble burst is not something that can be predicted but Goldman’s analysis showed that they believed that the housing market was very likely to fail. Had IKB and ICA known about Goldman’s stance, their behaviour towards the Abacus portfolio might have been
Something that came out of the investigations very clearly was the fact that Goldman never created a clear picture to ICA, IKB or any of their clients regarding Paulson’s role in selection of the abacus portfolio. Goldman constantly maintained a negative outlook on the housing sector but was still more than willing to sell the opposite position on a portfolio which was primarily selected by Paulson who firmly believed that the portfolio would …show more content…
The fact that company allowed and promoted to their clients a portfolio they believed would fail, and did not share this information with their clients pose a question mark on the ethical aspect of its behaviour. The banking sector is considered to play a key role in economic development. It helps to translate someone’s savings into someone’s investment. Thus, the money involved in the Abacus deal, i.e., the money put in by Paulson, IKB and ICA should have been invested further to spread the benefits across all parties that were involved. But the deal only focussed on benefitting Paulson and everyone else was left empty handed. The question about picking the right RMBSs is completely ruled out because of the fact that Goldman allowed some clients to suffer with improper knowledge, knowing the fact that the housing market was set to fail. A bubble burst is not something that can be predicted but Goldman’s analysis showed that they believed that the housing market was very likely to fail. Had IKB and ICA known about Goldman’s stance, their behaviour towards the Abacus portfolio might have been