Goldman Sachs has changed
By Contrarian
Published: December 16, 2009
Goldman Sachs of yesteryear is no more the Goldman of today. May partners have privately confided things have changed under Lloyd C. Blankfein.
My question is then what do you expect if you put a hardcore trader at the helm of affairs of any firm. For him nothing matters except a pennies in his and him firm pocket. Traders by nature are humble but the rich and spoiled ones like Lloyd are a different breed.
New York Times reports as Obama takes up the gauntlet at the banking industry:
as President Obama prods the financial industry to do more to help ordinary Americans — he chided “fat cat bankers†on Sunday for increasing their pay — some current and former Goldman executives say Mr. Blankfein has built a money machine that, while it still values its customers, culture and reputation, puts profits above all.
Interviews with nearly 20 current and former Goldman partners paint a portrait of a bank driven by hard-charging traders like Mr. Blankfein, who wager vast sums in world markets in hopes of quick profits. Discreet bankers who give advice to corporate clients and help them raise capital — once a major source of earnings for Goldman — have been eclipsed, these people said.
Mr. Blankfein has surrounded himself with a tight circle of executives drawn from Goldman’s trading operation. Many of these executives, like Mr. Blankfein, cut their teeth in the commodities division, J. Aron & Company. Gary D. Cohn, Goldman’s president, as well as the heads of the bank’s asset management division, are J. Aron alumni. So is the head of human resources.
With the traders ascendant, Goldman’s bankers are being urged to generate bigger profits. In what former partners called a significant shift, Goldman now uses “profiles†to track how much money its bankers are bringing in.
Granted, money is what makes Wall Street run, and Goldman Sachs is no exception.
“I don’t buy the argument that the old Goldman was more principled and less greedy,†said Arthur Levitt, a Goldman adviser and former chairman of the Securities and Exchange Commission.
But even Goldman concedes it is changing with the times. “This business is all about serving clients, and if you don’t evolve, you die,†said Lucas van Praag, a Goldman spokesman.
After first guiding Goldman through the near collapse of the nation’s financial system and then deftly extricating his bank from a federal bailout, Mr. Blankfein is now presiding over one of the richest periods in the bank’s 140-year history. Mr. Blankfein has accelerated a decade-long decline of Goldman’s old partnership ethos, which was built around the principle that its bankers and traders can do well — indeed, very well — while putting their customers first, former partners said. Publicly, Mr. Blankfein espouses the Goldman Sachs way. But privately, current and former partners say that he has fundamentally changed the way Goldman views its customers and the broader marketplace. The changes began when Goldman went public in the late 1990s, but have accelerated under Mr. Blankfein, they say.
Almost from the start, however, two camps inside Goldman competed for profits and power: investment bankers and traders.
Today, the traders — Mr. Blankfein’s camp — are firmly in power. While Goldman employs nearly 31,000 people, in business ranging from money management to traditional investment banking, the bank makes the bulk of its money from trading. Mr. van Praag said 50 percent of Goldman’s revenue came from fees that it charged for services like investment banking. The other half is generated by Goldman, using its capital for itself and its clients. While Mr. Blankfein’s traders are minting money, his investment bankers are being pressed to keep a closer eye on the bottom line. Bankers who once spent years cultivating corporate clients in hopes of one day landing lucrative work like advising on a big merger, are now being urged to squeeze more revenue from their customers.
To me the reporter is more concerned about how Goldman traders are hogging all the limelight while the fat cat bankers are sulking. The article would have been far more relevant if Goldman contribution to society could have been explored. The blood sucking vampire!!!
Fresbee
IC
