1. Based on the conflicts of interest raised in the case, has Goldman Sachs, in effect, shorted itself? Explain why and why not.
2. How should Goldman Sachs have handled each conflict of interest?
3. If Goldman Sachs really is innocent of all conflicts, why has the firm’s reputation suffered?
4. Referring to the outrage over the apparent abuse of AIG, Farzad and Dwyer ask the question:
5. Is it appropriate for Goldman Sachs to “bet against their clients” through their investment activities?
6. One of Goldman’s main arguments in their defense is that their intentions were good – they did what they did in response to client requests, thus facilitating markets and making the world a better place.
a. Is the ‘good intention’ argument sufficient to claim actions following from it are ethical? Why and why not? Remember the saying: ‘The road to hell is paved with good intentions.’
b. Is there something in addition to good intentions that Goldman Sachs would have been wise to consider in its decision making?
7. How would you have advised Goldman Sachs’ executives to have handled this crisis better?
8. What would an appropriate level of bonus payments be for Goldman Sachs as a whole?
9. Would bonuses paid in Goldman Sachs stock be more appropriate than those paid in cash?
During the depths of the subprime lending crisis in 2008, a major U.S. investment banking firm, Goldman Sachs, required a $10 billion bailout from the U.S. government’s Troubled Asset Relief Program (TARP) to stay afloat. But in 2009, Goldman’s fortune’s reversed as the firm earned $13.4 billion profit, repaid the $10 billion to TARP, and paid its employees over $16 billion.