THE PARTNERSHIP

Investment-strategy consultant Ellis (Capital, 2004, etc.) gives the financial powerhouse a largely bullish evaluation.

His expansive appraisal does, however, report the bad times along with the good at Goldman Sachs. Ellis devotes a few conscientious pages to the firm’s early years. Beginning in 1869, founder Marcus Goldman pioneered the resale of commercial paper and catered mainly to fellow Jews. After the arrival of son-in-law Samuel Sachs as a junior partner in 1882, the company expanded its reach and consolidated its prestige, moving into investment banking with the first public stock offerings of Sears Roebuck (1906) and F.W. Woolworth. & Co. (1912). The main focus of Ellis’s illuminating text, however, is the preternaturally aggressive partnership’s latter-day adventures as Goldman Sachs grew to be an international force in the last half of the 20th century. With only minor lapses into jargon, the author explicates with clarity and verve the fundamentals of risk arbitrage and block trading, mergers and acquisitions, retail sales, initial public offerings, equity underwriting, derivatives, arbitrage investment management, hostile takeovers and credit default swaps. He provides intriguing, specific descriptions of notable events like the collapses of tired old Penn Central and cocky hedge fund Long Term Capital Management. He chronicles the doings of swashbuckling brigand Robert Maxwell. He offers astute character sketches of the principal players, many of whom were sources: tough Gus Levy; “the two Johns” (Whitehead and Weinberg); Secretaries of the Treasury Bob Rubin and Hank Paulson; and Jon Corzine, who tried too soon to go public and ultimately departed for the U.S. Senate and the New Jersey statehouse. Mapping the firm’s tangled loyalties and fiefdoms, Ellis paints a Darwinian portrait of fierce competitors who played people along with the markets.

Informed and accessible.