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Goldman Sachs (NYSE:GS) Struggling with Ongoing Negative Publicity


Tuesday, March 2nd, 2010

Whether you like them or not, and whether you think they're guilty of certain assertions or not, there is no doubt Goldman Sachs (NYSE:GS) has been singled out as the company to bear the brunt of political and consumer frustration over the economic crisis.

That has led to a public relations nightmare which in some cases has been brought on by their own actions or reactions to certain circumstances.

Some executives at the company have even admitted it would be better if Lloyd Blankfein stepped down from his role as chairman of the company and place a more media-savvy person in place of him to navigate through the rough waters of current public opinion about the company.

Here's how Goldman Sachs identified their problem in a new 10-K filing:

"Governmental scrutiny from regulators, legislative bodies and law enforcement agencies with respect to matters relating to compensation, our business practices, our past actions and other matters has increased dramatically in the past several years. The financial crisis and the current political and public sentiment regarding financial institutions has resulted in a significant amount of adverse press coverage, as well as adverse statements or charges by regulators or elected officials.

"Press coverage and other public statements that assert some form of wrongdoing, regardless of the factual basis for the assertions being made, often results in some type of investigation by regulators, legislators and law enforcement officials or in lawsuits. Responding to these investigations and lawsuits, regardless of the ultimate outcome of the proceeding, is time consuming and expensive and can divert the time and effort of our senior management from our business.
"Penalties and fines sought by regulatory authorities have increased substantially over the last several years, and certain regulators have been more likely in recent years to commence enforcement actions or to advance or support legislation targeted at the financial services industry. Adverse publicity, governmental scrutiny and legal and enforcement proceedings can also have a negative impact on our reputation and on the morale and performance of our employees, which could adversely affect our businesses and results of operations."

A lot of this concern is coming from shareholders who believe the stock price is being held down from all the negatives swirling around about Goldman Sachs.

But from an investment point of view, this could be an opportunity to buy up more shares than to worry over short term fluctuations that have little or no meaning to building wealth.

There is no doubt most of this will go away and be pushed to the side once there is a real economic recovery in America, and those that are patient and willing to wait should reap dividends from the stock price of Goldman Sachs increasing at that time.

From the management of Goldman Sachs perspective, they just have to be willing to sit under the pressure for a while, as the economy doesn't look like it's going to do anything that will relieve the pressure valve any time soon.



Article by Gary B

The views expressed are the subjective opinion of the article's author and not of FinancialAdvisory.com



Tags: banking industry , goldman sachs , public relations , share price

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