As he was leaving an interview with the Times of London, Lloyd Blankfein, CEO of Goldman Sachs, bantered with a reporter saying, “I’m off to do God’s work,” resulting in viral rampage of his off-the-cuff remark. Asked later how he should act in front of the media, Blankfein said he’s been told to “do anything but be myself.” On the substantive issues of Wall Street reform and recovery, Blankfein spoke frankly about the financial crisis and Goldman’s role in the past two years at The Directorship Forum on Tuesday, November 17th, before an audience of more than 300 directors, chief executives, and investors.
The nearly 60-minute question-and-answer session conducted by Jeffrey M. Cunningham, chairman, CEO, and editorial director of Directorship, began with Blankfein clarifying how Goldman was able to tread the turbulent waters during the fall of Wall Street: “We didn’t delegate risk assessment to ratings agencies…[companies need to] mark your positions to market so when things start dropping–you’re aware early.” Blankfein noted that everyone on all sides of the issue managed to “miss the signs.”
“If you would have asked me at the beginning of 2006/2007 that mortgage rates would go down,” Blankfein acknowledged. “I had no idea.”
Even in the most ideal circumstances, risk is always a factor. “You can take away all risk but you’ll really curtail growth,” he said. “In a risk-oriented world, where there’s so many cross-currents. I never want to build in a threshold…for fear that people will stop telling me [what's on their minds].”
On Goldman’s revered corporate culture which emphasizes partnership over hierarchy, Blankfein said he relies daily on the talent of Goldman’s management and board: “I think of my subordinates as such on the letterhead but…[it's a] partnership.
“We have a pretty flat organization–I don’t have to invite people into my office–they feel like they have the right–I’ll get suggestions from everybody on the organization chart.”
Goldman plans to continue to expand globally and when asked how Goldman integrated into places such as China, he stressed the importance of being open to the world. “There’s no doubt [there is a] different texture…look at what they’ve [China] accomplished…dealing with social forces at work…[they had to] to bring them [people] into the city just to feed them–that’s very different than what would be needed here [in the U.S.].”
When asked how he felt about the separation of CEO and chair positions, Blankfein noted that having an independent lead director helped him immensely, as that position takes on some of the chair role. He emphasized that he has a strong relationship with all members of the board, noting that: “If I’m looking for a particular locus point of a problem–the lead director tells me.”
When asked by a conference attendee how he and others could have missed such an enormous downfall in the economy, Blankfein referred to points he made earlier, emphasizing that it was missed across the board on Wall Street. He added that he would have loved to have known what was to come but added, “In three years time, I’ll know exactly what I should have done today.”
To view a webcast of the Directorship interview with Blankfein, click HERE.