High numbers make you highly suspect

The Goldman Sachs building at 85 Broad Street, Manhattan.

TEXT OF STORY

Doug Krizner: Before the market opens, we'll see earnings from Goldman Sachs, thought to be the smartest firm on Wall Street. So look for some stellar numbers. But Marketplace's Sam Eaton reports this success can come with a price.


Sam Eaton: It's been a dismal year for most investment banks -- except for Goldman Sachs. While competitors continued to buy up risky subprime loans, Goldman sold, and that bet continues to generate gains for the firm.

It's also landed Goldman Sachs superstar status on Wall Street. Analyst Jeffrey Harte of Sandler O'Neil says that's both a blessing and a curse.

Jeffrey Harte: It's good to be known as the best, and I think they like to be known as the best. From the other perspective though, people are going to watch you closer, it's hard to sneak up on markets and environments, you potentially have regulators taking a closer look at you.

The Securities and Exchange Commission is doing just that. Some lawmakers want the SEC to open a formal investigation into whether the firm unfairly influenced the market.

Goldman Sachs declined to comment for this story, but many analysts defend the firm's integrity. They say Goldman's huge profits are the result of its nimbleness, not any wrongdoing.

I'm Sam Eaton for Marketplace.

About the author

Sam Eaton is an independent radio and television journalist. His reporting on complex environmental issues from climate change to population growth has taken him all over the United States and the world.

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