Goldman Sachs shares hit ten-year high as Donald Trump fills team with the bank's former employees

Former partner Steve Mnuchin was on Monday confirmed as Treasury Secretary, joining chief strategist Steve Bannon and head of the National Economic Council, Gary Cohn

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The Independent Online

Goldman Sachs has had a phenomenal run since Donald Trump’s November election victory. 

Its shares have been Wall Street’s leading performers and hit a ten-year high close on Tuesday as investors banked on friendly policies coming from a White House filled with several former Goldman employees.

Traders have bet on Donald Trump’s policies boosting the US economy, and his plans to tear up costly Wall Street regulation raising banks’ profits.

Financial sector profit margins have suffered as post-crisis interest rates have remained at close to zero, something which investors see coming to an end as Mr Trump’s proposed infrastructure spending spree lifts inflation, prompting the Federal Reserve to raise rates quicker.

Goldman shares rose 1.3 per cent to close at $249.46 (£201.27) in New York on Wednesday, passing a closing high set in late 2007, just before the industry plunged into a global meltdown. The stock opened slightly higher on Thursday morning.

While most bank shares have risen since Mr Trump’s election, Goldman’s have outperformed their peers, soaring 37 per cent as the new President quickly ditched his campaign rhetoric of being an outsider up against a corrupt Wall Street elite.

As a candidate, Mr Trump repeatedly railed against Hillary Clinton for lucrative speeches she made to finance firms, particularly Goldman Sachs, and decried the influence the bank has in Washington. But with several influential alumni now within the President’s inner circle, the New York firm is well-positioned to see its market philosophies expressed in policy.

No fewer than five former-Goldman employees make up Mr Trump’s team, including head of the National Economic Council Gary Cohn, who came straight from his job as president of the 148-year old investment bank - after cashing in $285m in cash and stock - and chief strategist Steve Bannon, who is seen as the President’s closest advisor.

Former Goldman partner Steven Mnuchin was on Monday confirmed as Treasury Secretary and another former senior Goldman banker, Jim Donovan, is under “strong consideration” to serve as Mr Mnuchin's No. 2, according to MSNBC. 

Democratic Senator Elizabeth Warren last year derided Mr Mnuchin as the Forrest Gump of the financial crisis“ for participating in “all the worst practices on Wall Street” over two decades.

He will join Dina Powell, who ran the firm’s philanthropic division, and in January was brought in as the President’s senior counsellor for economic initiatives.

Mr Trump has taken some steps to assuage concerns over potential conflicts of interest. A 28 January executive order requires members of the administration to not make decisions “directly and substantially related” to former employers for two years, but some senior lawmakers argue this is not enough.

Ms Warren and fellow senator Tammy Baldwin this month called for Mr Cohn in particular to withdraw from any matter that could have “a significant indirect impact on Goldman” during his entire time in the administration, Bloomberg reported.