Same CEO, Different Goldman Sachs -- WSJ

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06/09/2018 | 08:48 am
Lloyd Blankfein


By Liz Hoffman



This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (June 9, 2018).



A decade after the financial crisis, The Wall Street Journal has checked in on dozens of the bankers, government officials, chief executives, hedge-fund managers and others who left a mark on that period to find out what they are doing now. Today, we spotlight Goldman Sachs CEO Lloyd Blankfein and former Citigroup executive and Treasury Secretary Robert Rubin.



Lloyd Blankfein took the stage of New York's Mandarin Oriental hotel ballroom last December and addressed the hundreds of Goldman Sachs Group Inc. alumni assembled for their annual dinner.



"This is my 12th time addressing this group," Goldman's CEO said. "But don't get your hopes up. I'm staying -- at least through the end of dinner," he added, to laughs.



Almost alone among figures who made headlines during the financial crisis, Mr. Blankfein is exactly where we left him, running Goldman -- for now. The Wall Street Journal has reported that he is likely to step down by year-end, and he recently tapped lieutenant David Solomon as his successor, bringing some clarity to what had become finance's favorite parlor game.



He will leave a firm dramatically changed by the crisis, undeniably on stronger footing but searching for a clear identity in the new banking landscape.



In 2007, Mr. Blankfein was a year into the role, running the most ruthless and profitable firm on Wall Street. A former tax lawyer whose quarter-life crisis brought him to finance, Mr. Blankfein rose to power by pushing Goldman's traders into riskier territory. That year, he got a $68 million bonus.



Today, that high-octane risk-taking has been tamed by regulation and market forces, sending Goldman and its longest-serving CEO into unfamiliar territory in search of growth.



The firm in 2016 launched Marcus, a buzzily named consumer bank that makes small loans online. It is embracing simpler, fee-based businesses like corporate lending and asset management as traditional moneymakers like trading commodities and underwriting stock sales become less profitable.



Mr. Blankfein, who decades ago turned heads for a multimillion-dollar winning bet on the U.S. dollar, last year called a few Marcus borrowers to thank them personally for their business. He sorts weekly through email complaints that make their way to his inbox.



On his watch, Goldman has raised deposits and now relies less on the short-term borrowing that left it dangerously exposed in 2008. Nearly all the traders who engineered the mortgage-derivatives bets that threw Goldman into the political fire after 2008 have left. While that has helped Goldman carefully rebuild its image, revenue has flatlined and profitability has fallen.



It isn't clear what Mr. Blankfein will do after leaving the job. His two immediate predecessors as Goldman CEO became Treasury secretary, a path that seems less open to Mr. Blankfein. Some New York City politicos have urged him to run for mayor, according to people familiar with private conversations. Friends say he is flattered but uninterested.



He may also remain on Goldman's board temporarily after stepping down as CEO, people familiar with the matter have said.



Write to Liz Hoffman at [email protected]





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