Goldman Sachs, or Goldmine Sachs, as some call it, reported a record $13.4 billion dollar profit last year. But just how is that money made?
The CEO of Goldman, Lloyd Blankfein, claims that the bank is doing "God's work," explaining "We help companies to grow by helping them to raise capital." But industry insiders are not yet convinced.
According to public records of Goldman's financial filings, only a tenth of its revenues came from investment banking last year and more than three-fourths from trading for its own account.
In this video, the first in a two part series about unraveling the profit puzzle at Goldman, Economic Correspondent Paul Solman talks to industry insiders and former Goldman executives to find out the real scoop.
1. What do bankers do?
2. What roles to banks play in the United States?
1. How does Goldman make most of its money?
2. What is trading, as opposed to "traditional investment banking"?
3. What is "front-running"? Do you think it's wrong? Explain your answer with specific examples.
4. Do you think the government hasn't done anything about front-running because: 1: It's thought not to be illegal; 2: It's too hard to prosecute; 3: The government is so influenced by contributions from Wall St., it doesn't want to kill the goose that supports it?