December 9: From Peddler to Investment Pirate

Marcus Goldman, who worked as a peddler with a horse-drawn cart upon arriving in America and went on to found Goldman Sachs, was born in Germany on this date in 1821. He created an eponymous financial firm in 1869 and took in his son-law, Samuel Sachs, in 1882. Goldman Sachs pioneered the use of commercial paper (IOUs) for business capital and also helped to establish the initial public offering market. The company, now headed by Lloyd Blankfein, paid nearly 1,000 of its executives more than $1 million each after receiving bail-out funds from the Troubled Assets Relief Program (TARP) in 2008. Goldman Sachs ranks #1 among financial firms in annual net income, earning close to $10 billion per year. Among the assets it owns seems to be the U.S. government.

“They bundled toxic mortgages into complex financial instruments, got the credit ratings agencies to label them as AAA securities, and sold them to investors, magnifying and spreading risk throughout the financial system, and all too often betting against the instruments they sold and profiting at the expense of their clients.” —Senator Carl Levin