Will Investment Banks Return to Partnership Form?

Will the colossal mishandling of the public relations effort at Goldman Sachs by Lloyd "Doing God's Work" Blankfein, coupled with sleazy dealings with the government, cause the good and honest producers at GS leave to form private IB partnerships?

Expect moves out of GS in Q1 2010. GS has laid down with government and now it will get kicked around by government.

Treasury Secretary Tim Geithner is even turning on GS, most likely to save his own skin. Bloomberg reports:

Taking aim at what he called “an era of irresponsibly high bonuses,” Geithner said all banks -- even those that have repaid government aid -- need to restrain the amount they pay their leaders and tie compensation to long-term goals.

“We want to see fundamental constraints on how senior executives are paid at these institutions,” Geithner said in an interview today for Bloomberg Television’s “Political Capital With Al Hunt,” that will air today and through the weekend. “It is very important that we change the way these executives are paid, the form of compensation, this year.

Why would a solid professional want to hang around this nonsense, when he did nothing to create it or support it? Citi lost their top earning commodity producing arm because of political nonsense about bonuses in that division that had nothing to do with the crisis situation Citi got itself into, I expect the same kind of departures at GS, and other public IB's, but especially GS.

In fact, GS is the best short on the boards right now. The public is watching the government- GS relationship so closely right now that if Lloyd went crying to Geithner, the public would be up in arms if Geithner gave Blankfein a tissue to wipe away the tears. And, it is really not clear that GS knows how to make money on its own anymore, without a helping hand from Timmy and Bennie.