Leading article: Goldman Sachs will live to fight another day

Investment bank's legal case is serious but not life-threatening

These are dangerous days for one of the world's most famous banks. On the one hand, Goldman Sachs is expected to reveal first-quarter results tomorrow showing huge profits, which will prompt the paying out of about £3.5bn in bonuses for staff, some of whom are in line for several million pounds each for just three months' work. So much for the recession having dealt a mortal blow to the bonus culture. What may stop the champagne from flowing too copiously, however, is that the bank is simultaneously in legal trouble, facing a pincer operation from both sides of the Atlantic.

The Wall Street regulator, the US Securities and Exchange Commission, said on Friday that it had charged Goldman over claims that it defrauded investors of a billion dollars over a bond allegedly designed to fall in value, thereby benefiting a favoured hedge fund manager at the expense of many others. Adding to the perfect storm facing Fabrice Tourre, the French-born Goldman Sach executive at the centre of the affair, Britain's Financial Services Authority is understood to be liaising with the SEC in New York over the case, in which Royal Bank of Scotland lost $840m.

These are only allegations and Goldman denies wrongdoing. But its problem is that whether or not it fends off the allegations, the fact that these claims have been aired at all is encouraging others to follow suit. Lord Oakeshott, a Treasury spokesman for the Liberal Democrats, has already written to the FSA demanding an inquiry into Goldman's affairs, while RBS is also reported to be considering legal action.

Then consider the cold fury of the Prime Minister. If Goldman ever thought it was going to draw in favours from the leader of a party which until recently prided itself on the degree to which it felt relaxed about the filthy rich, the tone must have been startling.

"I am shocked at this moral bankruptcy," Gordon Brown told the BBC yesterday. "I want a special investigation done into the entanglement of Goldman Sachs and the companies there with other banks and what happened." Mr Brown said the FSA should investigate "immediately", going on to say he assumed that unnamed banks "will be considering legal action".

Goldman Sachs might be forgiven for finding hypocritical this sudden fashion for attacking it as the symbol of all that is wrong with the world. A few years ago, all the main political parties worshipped at the feet of investment bankers, lest any criticism might jeopardise London's position as the global capital of finance. The City was seen as a cure-all to most of modern Britain's dilemmas, an answer in itself to the lingering question of what our post-imperial role in the world was to be. Never mind about the decline of manufacturing. We had banks.

That political climate has changed radically. The SEC investigation caught Goldman off balance and could claim the scalps of some executives. If it knocks a little braggadocio out of these kinds of banks and invigorates financial regulators here and in America, all to the good. But it would be naïve to imagine Goldman's difficulties will necessarily cause its clients to walk away, which is the only development that will sink it in the end. Most are familiar with the idea that in this aggressive investment world, it is not unknown for banks to prefer some clients over others. Many might wish it otherwise, but this is not the end of the world for Goldman Sachs, or the end of the world that it represents.