The humbling of Goldman Sachs

GOLDMAN Sachs has always seen itself as exceptional. When the bank floated its shares in New York in 1999, it declared: “We have an uncompromising determination to achieve excellence in everything we undertake.” Conspiracy theorists have long paid it the backhanded compliment of imagining that it secretly runs the world. Yet lately the only exceptional thing about the Wall Street icon has been its mistakes.

Since October, Goldman has made a U-turn on its plan to build a big consumer bank; booked one of its worst quarterly results for a decade, measured by return on equity; and attracted a probe by the Federal Reserve.

The firm is not yet in serious trouble, but it is trapped by its own mythology. Its recent struggles show how hard it will be to reform – and illuminate a new balance of power in global finance.