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Goldman's Armor Shows Some Cracks

Disparaging comments by former Goldman executives may be the most damaging aspect of the story, but they aren't the only problems for Goldman. McLean (herself a former Goldman analyst) also does a fine job of organizing, presenting and elaborating upon other criticisms that are familiar to Goldman watchers.

For example, she points out that Berkshire Hathaway (BRK-A) Chairman Warren Buffett's investment in Goldman was not strictly about his faith in the company. Buffett was also relying on the government taking certain steps to prevent a meltdown. In doing so, she presents a fresh argument to counter Goldman's frequent statements that it didn't need government support to survive.

Goldman bulls will argue that profits are the only thing that matters to the bank, and those, of course, are great. Still, the profits depend upon relationships, and while McLean quotes a money manager who says he does business with Goldman for the same reason he would let the mob pick up his trash, the metaphor may be troubling to some Goldman investors should they reflect that the mob isn't nearly as powerful as it used to be.

-- Written by Dan Freed in New York.

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