Though a public company for 10 years, Goldman Sachs is seen as something of a black box. Now, under so much attention and scrutiny, the firm is opening up. What’s revealed is a company with a purposefully non-hierarchical leadership, a highly sophisticated structure for managing risk, and an intensely involved board that also just happened to be one of two major banks to field a risk committee (JPMorgan was the other). It is these attributes that have helped make the Goldman Sachs Chairman and CEO Lloyd Blankfein, CEO of the Year.
“The Legacy” could be a sign outside Lloyd Blankfein’s door. It would refer not only to his role as the current steward of the venerable global financial powerhouse, but his own reflection of the values and character of the firm’s earliest stakeholders.
Marcus Goldman and Samuel Sachs, the eponymous founders, were of the type that epitomized the entrepreneurial instinct: humble origins, all brains and bootstrap, and possessed of infinite patience and tenacity that stood them in good stead while they made their way past the Seligmans and (ironically) the Lehman brothers, the movers and shakers of Wall Street in the late 19th century. Both Goldman and Sachs were of a kind that could easily describe Blankfein in terms of character—solid and dependable, with strong family ties; in terms of personality—no-nonsense, direct, affable, and possessing not a hint of self-indulgence; and in terms of business manner— attentive, cautious and strikingly savvy. At a Goldman event not long ago, Blankfein was overheard to say: “Do I look like a master of the universe? I’m a lawyer.”
Blankfein was named CEO in 2004 upon Henry Paulson’s departure to the Bush Treasury Department. He follows a distinguished, if somewhat better- known, line of predecessors that includes, in addition to Paulson and Jon Corzine, John Whitehead (with John Weinberg) and Robert Rubin (with Stephen Friedman). But who is he?
To the Projects Born
Hardly apolitical, Blankfein is a Democrat who was a supporter of the candidacy of John Kerry for President. But his pedigree is of a different social strata than that of the privileged Bostonian. Blankfein was born in the Bronx, grew up in East New York, and lived in local public housing during his childhood. His father was a postal worker. He received a full scholarship to Harvard at age 16, and in 1975 entered Harvard Law School. Upon his graduation in 1978, he joined a California law firm in the tax department. He applied to—and was rejected by—a prestigious private-investment bank named Goldman Sachs. Instead, in 1981 he joined J. Aron & Co. as a gold salesman. Later that year, Goldman Sachs acquired Aron. Blankfein was appointed to run the entire Goldman unit in 1994 and by 2002, he was head of all sales and trading activities, responsible for more than 80 percent of the firm’s income. He was named chairman and CEO in 2006. U.S. buyout legend Thomas H. Lee says, “Blankfein is not only brilliant, but he is a genuinely nice guy.”
As any football coach will say, nothing is harder than a winning season your third year out. That Goldman turned in spectacularly strong financials in 2009 must be considered among the more dynamic feats in business history. The last year has presented some of the worst kinds of setbacks to financial executives, many of whom suffered career-ending injuries or have been permanently sidelined, including Bear Stearns’ Jimmy Cayne, Merrill’s Stan O’Neal and John Thain, Lehman’s Dick Fuld, and soon, Bank of America’s Ken Lewis. The media and the political class has placed CEOs among the least-admired ranks, formerly reserved for used-car salesmen and Congress, which may not be surprising given that the American economy entered into a recession that nearly matched the Great Depression.