Goldman: Blankfein Prepares for Exit And It's Time for a New Era
(Bloomberg Gadfly) -- Goldman Sachs Group Inc. CEO Lloyd Blankfein has described his role as the "best job in the world." Amid a report he is preparing to relinquish the position, investors can be grateful for his service, but at the same time, welcome a new era.
The Wall Street Journal reported Friday that the 63 year-old, who took over from Hank Paulson in 2006, is set to end his tenure as soon as this year. Blankfein responded via Twitter, saying the announcement was "the WSJ's ... not mine." Still, assuming there is truth to the news, it's worth taking a look at his legacy.
Blankfein can be proud of a lot: Under his leadership, Goldman Sachs not only weathered the financial crisis, but emerged relatively unscathed. Since then, the Wall Street bank has managed to thrive despite the introduction of extensive post-crisis regulation (some of which it has been slow to adopt, perhaps intentionally).
The question remains, though, whether Goldman Sachs has done enough under Blankfein's leadership to adjust to a post-crisis world and move beyond its longtime focus on investment banking and trading. A shift is underway, but there is room for more innovation.
Currently, Goldman Sachs is muscling into consumer banking and bolstering its efforts in areas such as corporate lending as a means to drive growth amid a slump in trading. Arguably, decisions to tackle Main Street and broaden its wealth-management businesses should have been made sooner. And while core businesses such as investment banking and investing have remained strong, Blankfein's successor -- likely one of two co-presidents, Harvey Schwartz or David Solomon -- will need to usher in fresh ideas to make sure the firm is increasingly diversified, especially when the next downturn comes.
Importantly, Blankfein's exit gives Goldman Sachs's board an opportunity, and one it should seize, to strengthen its corporate governance by naming him non-executive chairman or at least giving that role to someone who isn't his successor as CEO. Like JPMorgan Chase & Co.'s Jamie Dimon, Morgan Stanley's James Gorman and Bank of America Corp.'s Brian Moynihan, Blankfein holds the joint roles of chairman and CEO, a feature that shareholders across Wall Street have increasingly attempted to abolish.
Goldman Sachs's board debated making that change back in 2006 but ultimately handed control to Blankfein. Twelve years later, in a different world, I'd expect a different outcome.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
Gillian Tan is a Bloomberg Gadfly columnist covering deals and private equity. She previously was a reporter for the Wall Street Journal. She is a qualified chartered accountant.
To contact the editor responsible for this story: Beth Williams at bewilliams@bloomberg.net.
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