Chapter 4

Under Pressure, Goldman Grows Quickly and Goes Public

AT A GOLDMAN PARTNER MEETING, THE STORY GOES, A SENIOR partner asked the new partners to identify the two men who were most important to the firm’s business. The new partners responded with last names: Goldman, Sachs, and Weinberg. The senior partner then revealed the answer: Senator Carter Glass and Representative Henry Steagall.1

Congress passed the Glass–Steagall Act (formally known as the Banking Act of 1933) to provide Depression-era deposit bank customers protection against the additional risks involved in trading and investing.2 Its intent was to separate the consumer deposit–based commercial banking industry from investment-banking activities by prohibiting well-capitalized ...

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