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Opinion
Michael P. Regan

Goldman Spreads the Special Sauce

The bank's risk-management system can bring in more business in public than in private.

Goldman Sachs' risk-management system -- known as SecDB -- was widely credited with helping the firm sidestep the worst of the bloodbath in markets during the financial crisis. That's the positive.

On the negative side, SecDB was widely credited with helping Goldman sidestep the worst of the bloodbath in markets during the financial crisis.  

Why the negative? Well, sidestepping those losses obviously did some serious long-term damage to Goldman's reputation, providing critics with a blank canvas to paint a portrait of a firm that pushes garbage securities on clients while shorting them for its own accounts. 

Now from the Wall Street Journal comes some more details about the bank's project to allow clients access to the "secret sauce" of SecDB to use in their own investment recipes. 

This, obviously, is great fodder for the critics and conspiracy theorists, if the always lively comment section of the Journal is any indication. Surely, it's reasoned, SecDB must be antiquated and worthless if the firm is giving it away.

That seems unlikely. Rather, it's more likely that in a post-Volcker Rule world where Wall Street firms have fewer risky positions to monitor, the technology is simply more valuable to Goldman when it's placed in the hands of clients rather than hoarded in-house.