December 6, 2016    4 minute read

Is Goldman Sachs The Most Influential Company In The World?

Friends In High Places    December 6, 2016    4 minute read

Is Goldman Sachs The Most Influential Company In The World?

Throughout his campaign, the soon to be 45th President of the United States denounced the “abuses of Wall Street” and criticised the excessive power of large investment banks. For the past few weeks, there has been a surprising turnaround; the “anti-establishment” President appointed Steven Mnuchin, a former financial advisor who worked at Goldman Sachs for 17 years, as Secretary of the Treasury, the most important economic position of his administration.

In one of his commercial spots, Donald Trump showed Goldman Sachs’ boss Lloyd Blankfein accusing him of planning with Hilary Clinton to “destroy American sovereignty in order to enrich the globalised financial powers.

But Donald Trump never does things by halves; Trump is also close to Garry Cohn, number two in Goldman Sachs. Apparently, the 45th US President would consider him for director of the budget.

Who Is Steven Mnuchin?

Steve Mnuchin was a pioneer of trading, working in the bank until 2002. His most notable “blows” are his successive investments in banks stuck in the subprime crisis whose losses were covered in part by a federal fund. He has also financed many blockbusters in Hollywood like Avatar, X-men and the Oscar-winning American Sniper.

Steven Mnuchin is not the only one to have his champion. Steve Bannon, the brainchild of the iconoclastic campaign of Donald Trump, future special adviser to the President, also gained confidence in the Bank of Manhattan. Bannon is similar to Anthony Scaramucci, who advises the President for the making of his Administration and who eventually will be offered an important position in Trump’s Administration.

Goldman Ties With The Administration

During this presidential campaign, Wall Street banks openly financed the Clinton campaign. However, in the aftermath of November 8th, merchant banks realised that the new president could serve their interests. How? Simply by deregulating the financial industry and by reducing the US corporation tax rate. Donald Trump, who did not expect to be elected, drew from his network, most of whom were former experts trained at Goldman Sachs. It is a fact: serving in public life is openly encouraged.

Close ties with political power have steadily increased over time. In 1993, during the Clinton administration, Bob Rubin, co-chairman of Goldman Sachs, was chosen by Bill Clinton to be his economic advisor and then officially as Economic Secretary. In 2006 (during the Bush administration), Hank Paulson, the then boss of the bank, was recruited for the same position. Obama was one of the few who did not recruit many former Goldman employees.

The bank has had a troubled few years recently. Just like its rivals, it had to pay a fine of more than $5bn for having underestimated the quality of its debts. Still, on many occasions, the bank has avoided costly fines and is now one of the most profitable thanks to its lead in trading sectors, securities issues and M&A.

The Global Network

Over decades, the network of Goldman Sachs has become global; from Australia to Europe the institution has wisely managed to place its employees in different top institutions. In Europe, many former Ministers and European Commissioners such as Mario Monti (former Italian Prime Minister), Romano Prodi (former Italian and European Commission President) and the ECB’s Mario Draghi had all worked for the bank.

Because it is present in every market, Goldman Sachs can enjoy having friends in key decision positions. Recruiting old politics is also part of the new strategy of the house. Recently, Manuel Barroso, former President of the European Commission, became the new president of Goldman Sachs International and has since been putting his address book at the disposal of the bank, to the shock of Brussels.

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