[Alberta's Child]

The beginning of the end of the Goldman Sachs I admired was when it ceased to be a partnership. As soon as that happened, he says, employees at Goldman Sachs had to do right by their shareholders. The easiest way to do that is by ripping off anyone who isn't a shareholder.

Lewis describes this very conundrum in the later chapters of Liar's Poker, when he found himself facing a personal moral/ethical dilemma between looking out for the company's bottom line (by selling risky bonds they held on their own books) and looking out for his customers' best interest (by steering them clear of the risky bonds the company was asking him to dump on them).

[chuckee]

I do not think that the danger of allowing investment banks to go public was that they would rip off anyone who is not a shareholder. The danger was that they historically muted risk by using low leverage when they were private partnerships since the bankers own capital was at risk.Once they were allowed to go public and they were playing with shareholders money and their own capital was no longer at risk is when the investment banks started increasing their leverage to Too Leveraged Not to Fail levels like 30 to 1.