Goldman Sachs is an international investment bank and financial services corporation based in New York City. Since its founding in 1869, the firm has since grown into one of the largest and most influential financial institutions in the world. Since in the 1980s, a number of Goldman Sachs executives have held senior positions in both Republican and Democratic presidential administrations.

Since 2018, Goldman Sachs and its subsidiaries have allocated hundreds of millions of dollars to investments selected on the basis of race, gender, and other allegedly disadvantaged status. In addition, the firm declared plans to invest hundreds of billions of dollars in environmentalist projects and other initiatives informed by left-of-center environmental, social, and governance (ESG) activism. Following the anti-law enforcement protests and riots connected to the Black Lives Matter movement during the summer of 2020, Goldman Sachs announced plans to invest at least an additional $10 billion in projects benefiting women and racial minority groups. ¹

Since its founding, Goldman Sachs, its leadership, and its practices have generated significant controversy and resulted in numerous investigations, including into the firm’s role in the 2008 financial crash and its suspected use of “tax havens” and shell companies to hide its wealth.

History

Founded in 1869 by German-Jewish immigrant Marcus Goldman, Goldman Sachs has since grown into one of the largest and most influential financial institutions in the world. Starting in the 1980s, a number of Goldman Sachs executives have held senior positions in both Republican and Democratic presidential administrations. ²

Goldman Sachs founder Marcus Goldman started out in what would become the commercial paper business, purchasing promissory notes from businessmen as a way of providing temporary capital when credit was difficult to obtain. Selling commercial paper allows companies to generate funds for covering short-term obligations without taking out loans, but the seller must repay the buyer within a short period of time, though commercial paper is typically not backed by collateral the way loans are. Thus, this financial tool may entail a higher degree of risk for both parties. By the late 1800s, Goldman Sachs had expanded its range of services and formed relationships with major financial institutions across Europe. Throughout the following century, the firm experienced significant growth and entered new markets, including commercial property and underwriting. ^{2 3}

Goldman Sachs rapidly grew into different financial industries and services, including mergers and acquisition, underwriting corporate debate, and real estate transactions, by the late 20^th century. ⁴

Advocacy and Controversies

Under the tenure of chief executive officer David Solomon, the firm has become increasingly involved in political activism: since 2018, Goldman Sachs and its subsidiaries have allocated hundreds of millions of dollars to investments selected on the basis of race, gender, and other allegedly disadvantaged statuses. In addition, the firm announced plans to invest hundreds of billions of dollars in environmentalist projects and other initiatives informed by left-of-center environmental, social, and governance (ESG) activism. Following the anti-law enforcement protests and riots connected to the Black Lives Matter (BLM) movement during the summer of 2020, Goldman Sachs announced plans to invest at least an additional $10 billion in projects benefiting women and racial minority groups. ²

Since its founding, Goldman Sachs, its leadership, and its practices have generated significant controversy and resulted in numerous investigations. The firm has been accused of contributing to the 2008 global financial crisis by misrepresenting its investments in the residential mortgage market, and in 2010, it paid hundreds of millions of dollars as part of a settlement with the Securities and Exchange Commission (SEC). ⁵ In the aftermath of the financial crisis, Goldman Sachs also came under criticism for paying out more than $1 billion in bonuses to hundreds of employees after receiving $10 billion in Troubled Asset Relief Program (TARP) taxpayer funding. ⁶

In addition, the firm has been accused of avoiding taxation by maintaining hundreds of shell companies, or corporate entities which essentially exist only on paper and are registered in “tax haven” nations with loose, nonexistent, or unenforced financial regulations. ⁷ Meanwhile, the large number of former Goldman Sachs executives and associates who have gone on to take high-level federal government posts under both Democratic and Republican presidents has prompted concerns about conflicts of interest. ⁸

Numerous former Goldman Sachs employees have claimed that the corporation’s internal culture started shifting in the late 1990s or early 2000s, which allegedly resulted in a reduced regard for the interests of clients and a more cavalier attitude towards risky investments. ^{9 10} In 2014, two women who had previously worked at Goldman Sachs sued the firm over alleged gender discrimination, accusing managers of tolerating sexual harassment and assault in the workplace. The plaintiffs also claimed that corporate events excluding women, visits to strip clubs with clients, and other exclusionary behaviors were commonplace at the firm. ¹¹

Samples of Philanthropic Activity

The Goldman Sachs Charitable Gift Fund receives contributions from the firm’s current and former senior employees. The fund, which does business under the name Goldman Sachs Gives, receives and pays out hundreds of millions of dollars annually and is donor-advised, meaning that contributors recommend grant recipients. ¹² Goldman Sachs Gives is distinct from the Goldman Sachs Philanthropy Fund, which is also donor-advised but accepts contributions from outside the firm. ^{13 14}

Most grants from Goldman Sachs Gives are not explicitly political, with recipients including educational institutions, healthcare providers, and art projects. In addition, the fund has supported a large number of Jewish and pro-Israel initiatives, which has attracted criticism from left-wing Jewish observers. However, Goldman Sachs Gives has also issued grants to pro-abortion groups such as the NARAL Pro-Choice America Foundation, as well as the New Venture Fund (NVF), a major liberal activism funder and incubator. ^{12 15}

In 2009, Goldman Sachs Gives transferred nearly $1.1 million to its parent organization to support a multi-billion-dollar grantmaking initiative launched in 2008. Nonprofit Quarterly described the effort as “redemptive” charity intended to create a “counter-narrative” to reports that the firm was paying out tens of billions of dollars in executive bonuses despite accepting $10 billion in taxpayer funds as part of the Troubled Asset Relief Program (TARP). ¹⁶

Goldman Sachs Philanthropy Fund likewise regularly donates to both nonpolitical and to left-of-center organizations. For two examples: the Fund’s 2021 donations included almost $1.2 million to the Beth Israel Deaconess Medical Center and over $400,000 to Planned Parenthood of America affiliates. The Fund’s revenues totaled over $3.15 billion that year. ¹⁷

Political Investing

Shortly after chairman and chief executive officer David Solomon took charge of Goldman Sachs in 2018, the firm launched a series of efforts to redirect more of its funds towards investments benefiting environmentalist causes and allegedly disadvantaged groups. The first such initiative was to invest at least $500 million exclusively in businesses founded or led by women or racial minorities. Following this, the firm announced a goal of investing $750 billion in anti-fossil fuel projects by the year 2030. In 2020, Goldman Sachs launched a new fund to support left-of-center racial causes, starting with $10 million transferred from Goldman Sachs Gives. That year, the firm also started lobbying governments around the world to devote funds to unspecified “vulnerable populations” and has allegedly convinced them to commit at least $15 billion in total. In 2021, Goldman Sachs made a new commitment to set aside $10 billion to be invested exclusively in businesses and projects involving Black women.

In recent years, Goldman Sachs has also started applying left-of-center principles to its own operations. In its 2021 annual report, the firm touted the fact that its managing director class had more women and minorities than ever before, while also stating that it would be working even harder to shift its employee demographics in the future. ¹⁸ In addition, Goldman Sachs has started offering financial incentives for its female employees to get abortions: just a few days after the June 2022 Supreme Court ruling overturning the right to abortion at the federal level, Goldman Sachs chief executive officer David Solomon announced that the firm would cover all travel and procedures related to getting an abortion as part of the employee health-care plan. ¹⁹

Controversies

Financial Crisis Settlement

According to the Securities and Exchange Commission (SEC), Goldman Sachs provided investors with “incomplete information” about one of its higher-risk financial tools used for betting against the housing market in the lead-up to the 2008 global financial crisis. Federal authorities initially accused Goldman Sachs of misleading investors and claiming that the financial product in question would be administered by an independent manager. The complaint alleged that the firm had allowed the hedge fund manager for whom the product had been created to select investments personally. Because he was betting against the housing market, he intentionally chose bonds which he expected to lose value and benefit his own investments. Goldman Sachs marketed this financial tool to major international banks, pension funds, and insurance providers, who invested in it on the assumption that it was designed to grow in value.  While Goldman Sachs never admitted any guilt, it settled a lawsuit from the Securities and Exchange Commission in July 2010, paying some $550 million and accepting a court mandate to change some of its marketing practices and employee training methods. ⁵

In the aftermath of the 2008 financial crisis, Goldman Sachs received $10 billion in taxpayer funds as part of the Troubled Asset Relief Plan (TARP) implemented by the George W. Bush administration. The same year, it paid more than 900 employee bonuses of $1 million or more, with at least 200 receiving $3 million at minimum. Then-New York state attorney general Andrew Cuomo (D) criticized Goldman Sachs and other financial giants in a report, arguing that many banks had moved away from tying pay to performance and that “there is no clear rhyme or reason” to the way financial institutions were awarding bonuses. Then-U.S. Representative Ed Towns (D-NY) called the payments “egregious.” ⁶

Tax Evasion Allegations

In October 2016, the left-of-center advocacy group Citizens for Tax Justice released its annual report on multinational corporations and their reliance on tax havens, or jurisdictions with few or no financial regulations, to avoid paying taxes in their home country. According to the report, Goldman Sachs had nearly 1,000 subsidiaries located in parts of the world with well-known taxation loopholes, such as the Cayman Islands, where more than half of the firm’s offshore entities are registered. In total, Citizens for Tax Justice reported that the firm holds more than $28 billion of its assets offshore. The group argues that the behavior of Goldman Sachs and other alleged tax avoiders is further exacerbated by weak reporting requirements, which allow corporations to use tax havens without attracting attention from the public or from regulators. ⁷

Conflicts of Interest

A large number of former Goldman Sachs employees, including top executives, have gone on to work for the federal government, often taking positions related to financial regulation or monetary policy, especially since the days of the Reagan administration. In 1984, the firm’s then-co-senior partner John Whitehead retired and was soon selected as Deputy Secretary of State to President Ronald Reagan. In 1992, former Goldman Sachs co-chief operating officer Robert Rubin left his Wall Street career and became a special assistant on economic affairs to President Bill Clinton. In 1995, he became the Clinton administration Secretary of the Treasury. Hank Paulson, who was selected as the firm’s chairman and chief executive officer in 1999, became Treasury Secretary to President George W. Bush just five years later. ² Robert Rubin also developed a close relationship with fellow Treasury official Timothy Geithner, and when Geithner was selected as president the New York Federal Reserve in 2003, the search committee included former Goldman Sachs co-chairman John Whitehead. The board chair of the New York Fed at the time was Stephen Friedman, another former Goldman Sachs chairman. As New York Fed president, Geithner hired several of the firm’s senior employees for top regulatory posts. ⁸

In October 2008, the New York Times published an article detailing the extensive connections between Goldman Sachs and the federal government. According to the Times, the trend of top employees taking senior regulatory positions had earned the firm the nickname “Government Sachs.” The Times quoted Christopher Whalen, a professional financial risk analyst and a prominent critic of the Federal Reserve, who claimed that the back-and-forth between the firm and the federal bureaucracy was being “done without apology” and called it “grotesque.” ⁸ In 2010, CBS News released a report identifying several dozen former Goldman Sachs associates now working for the United States or foreign governments, comparing these frequent transitions from private- to public-sector financial management to a “revolving door.” ²⁰

Leadership

David Solomon is the chairman and chief executive officer of Goldman Sachs. He joined the firm in September 1999, rose to its presidency in January 2017, and assumed his current position in January 2019. Solomon also sits on the board of the Robin Hood Foundation, a multi-billion dollar charity that has been backed by a number of prominent and controversial investors and executives, including left-wing activist financier George Soros and disgraced former Hollywood producer Harvey Weinstein. Solomon also chairs the board of trustees at Hamilton College, which he attended. ²¹

John F.W. Rogers is the executive vice president, chief of staff, and secretary to the board of directors at Goldman Sachs. He joined the firm in 1994 and was named managing director three years later. Previously, Rogers held senior positions in the State and Treasury Departments. ²²

Adebayo Ogunlesi has been the lead director on the board of Goldman Sachs since 2012. He also sits on the national board of directors of the NAACP Legal Defense and Educational Fund, an influential left-wing racial minority legal activist group. ²³

Financials

In 2021, Goldman Sachs generated nearly $14.9 billion through its investment banking activities and reported at least $2.5 trillion in total assets under supervision. That year, the firm’s operating expenses totaled just under $32 billion, an approximately 10 percent increase over 2020. The firm attributed this primarily to employee pay raises and bonuses. ²⁴

1. ^[1]“A Brief History of Goldman Sachs.” Goldman Sachs. Accessed June 25, 2023. https://www.goldmansachs.com/our-firm/history/a-brief-history-of-gs.pdf
2. “A Brief History of Goldman Sachs.” Goldman Sachs. Accessed June 25, 2023. https://www.goldmansachs.com/our-firm/history/a-brief-history-of-gs.pdf
3. Adam Hayes. “Commercial Paper: Definition, Advantages, and Example.” Investopedia. January 1, 2023. Accessed June 25, 2023. https://www.investopedia.com/terms/c/commercialpaper.asp
4. “A Brief History of Goldman Sachs.” Goldman Sachs. Accessed June 26, 2023. https://www.goldmansachs.com/our-firm/history/a-brief-history-of-gs.pdf
5. “Goldman Settles With S.E.C. for $550 Million.” The New York Times. July 15, 2010. Accessed June 25, 2023. https://archive.nytimes.com/dealbook.nytimes.com/2010/07/15/goldman-to-settle-with-s-e-c-for-550-million/
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8. Julie Creswell, Ben White. “The Guys From ‘Government Sachs.’” The New York Times. October 17, 2008. Accessed June 25, 2023. https://www.nytimes.com/2008/10/19/business/19gold.html
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10. Peter Lattman. “An Ex-Trader, Now a Sociologist, Looks at the Changes in Goldman.” The New York Times. September 30, 2013. Accessed June 25, 2023. https://archive.nytimes.com/dealbook.nytimes.com/2013/09/30/goldman-as-case-study-not-hero-or-villain/
11. Jesse Solomon. “Suit alleges ‘boys club’ culture at Goldman.” CNN Business. July 2, 2014. Accessed June 25, 2023. https://money.cnn.com/2014/07/02/investing/goldman-sachs-lawsuit/index.html
12.  Goldman Sachs Charitable Gift Fund 2021 Internal Revenue Service Form 990. Accessed June 25, 2023. https://projects.propublica.org/nonprofits/organizations/113813663/202311099349301951/full
13. “An Analysis of Charitable Giving and Donor Advised Funds.” Congressional Research Service. July 11, 2012. Accessed June 25, 2023. https://crsreports.congress.gov/product/pdf/R/R42595
14. Goldman Sachs Philanthropy Fund. Accessed June 25, 2023. https://www.gspf.org/
15. Maya Haber. “Why Is Goldman Sachs Funding the Violent, Racist Jewish Settlers of Hebron?” Haaretz. April 11, 2016. Accessed June 25, 2023. https://www.haaretz.com/opinion/2016-04-11/ty-article/.premium/why-is-goldman-sachs-funding-hebron-settlers/0000017f-f6b5-d460-afff-fff748430000
16. Rick Cohen. “Goldman Sachs’ Rolls Out a Counter-Narrative in Philanthropic Giving.” Nonprofit Quarterly. October 31, 2013. Accessed June 25, 2023. https://nonprofitquarterly.org/goldman-sachs-rolls-out-a-counter-narrative-in-philanthropic-giving/
17. Goldman Sachs Philanthropy Fund 2021 Internal Revenue Service Form 990. Accessed June 26, 2023. https://projects.propublica.org/nonprofits/organizations/311774905/202243089349301314/full
18. “2021 Annual Report.” Goldman Sachs. Accessed June 25, 2023. https://www.goldmansachs.com/investor-relations/financials/current/annual-reports/2021-annual-report/
19. Reed Alexander, Hayley Cuccinello. “Goldman Sachs CEO David Solomon vows to cover employees’ travel costs for abortion after the Supreme Court strikes down Roe v. Wade.” Insider. June 24, 2022. Accessed June 25, 2023. https://www.businessinsider.com/goldman-sachs-to-cover-abortion-costs-for-women-to-travel-out-of-state-2022-6
20. Paula Reid. “Goldman Sachs’ Revolving Door.” CBS News. April 8, 2010. Accessed June 25, 2023. https://www.cbsnews.com/news/goldman-sachs-revolving-door/
21. “David Solomon.” Goldman Sachs. Accessed June 25, 2023. https://www.goldmansachs.com/about-us/people-and-leadership/leadership/board-of-directors/david-solomon.html
22. ^[1]“John F. W. Rogers.” Goldman Sachs. Accessed June 25, 2023. https://www.goldmansachs.com/about-us/people-and-leadership/leadership/executive-officers/john-f-w-rogers.html
23. “Adebayo Ogunlesi.” Goldman Sachs. Accessed June 25, 2023. https://www.goldmansachs.com/about-us/people-and-leadership/leadership/board-of-directors/adebayo-o-ogunlesi.html
24.  ^[1]“2021 Annual Report.” Goldman Sachs. Accessed June 25, 2023. https://www.goldmansachs.com/investor-relations/financials/current/annual-reports/2021-annual-report/