“Well, I’m going to try not to do what Gus did.”
Lucas van Praag, Goldman’s very charming, very British head of public relations, who has been sitting next to me taking careful notes in longhand, chuckles indulgently—but it’s not all that funny. Over the past few years, Blankfein has been under the kind of stress that would give any 56-year-old’s physician pause, starting with the abject terror of the financial crisis itself. (It’s a wonder, in retrospect, that none of those who spent sleepless nights staring into an abyss of their own creation didn’t keel over.) Under his watch, Goldman made it through the crash intact and even profitable, but in the aftermath, the firm’s business practices have been picked apart by journalists, lawyers, and government officials. It has been castigated by the president, accused by the Securities and Exchange Commission of fraud, and sued by numerous clients over its actions leading up to the crash. Both the Manhattan district attorney and the New York State attorney general are reportedly looking into its mortgage-backed-securities activities. And in April, Blankfein was accused of misleading a Senate committee, and it was reported he could face perjury charges.
Consequently, there isn’t a person on planet Earth who expects Blankfein to follow his predecessors into public service. While he says he’s not planning on leaving any time soon, “certainly not in this maelstrom,” he may not have a choice. Rumors of his pending resignation have been popping up with regularity for the last year, and more respected minds than Evelyn Y. Davis have suggested that his leave-taking would signal that the firm is leaving a dark period behind. Last week’s disappointing earnings report only added fuel to the fire: The firm missed estimates by almost 20 percent. Its shares are trading at a two-year low, it plans to lay off at least 1,000 people, and analysts speculate that regulatory restrictions will severely curtail the trading-reliant revenue model Goldman Sachs has expanded during Blankfein’s reign.
Should his era be coming to a close, Blankfein will be remembered first for having seen the 142-year-old-firm through some of the most perilous months in its history. But he will also have the distinction of having allowed Goldman Sachs to become a symbol of everything wrong with banks, corporations, even capitalism itself. Over the past three years, Goldman Sachs has been accused of having its hand in innumerable sinister activities, including but not limited to being the driving force behind the collapse of AIG and the Greek economy, spurring a global food crisis, colluding with Qaddafi, hoarding the swine-flu vaccine, hogging the fryers at Shake Shack, and bamboozling its clients in order to pay out monster bonuses. Even the firm’s name has become cultural shorthand for banker greed. “If you’re going to try to convince people you care about things other than money,” Amy Poehler quipped on Saturday Night Live, “may I suggest you remove the words gold and sack from your name?”
Goldman’s status as a lightning rod is frustrating to the people who work there. In their minds, the firm is the least obvious culprit among the financial institutions who attended the cheap-credit party. It did not issue faulty mortgages, or foreclose on people’s homes, or raise interest on credit cards, or jack up debit-card fees on consumers. Sure, it bought and sold the debt from those consumers, facilitated the sale of some of their bad debt to clients—but those were sophisticated investors, corporations, pension funds, extremely wealthy individuals. “We’re not saints,” one executive at the firm told me. “But we didn’t cause the crisis.”
The Goldman employee who finds this most exasperating may be the one Keith Olbermann recently named the Worst Person in the World. “It’s too bad,” Blankfein says at the diner. “And I don’t mean it’s too bad like ‘Screw ’em.’ I mean it’s too bad like I regret it.” But then he repeats a variation on the firm’s party line, which is that Goldman Sachs is being punished for its success. “I think there’s an element of ‘We’re a wholesale firm and we don’t deal with the public and so we’re mysterious,’ ” he says. “Mysterious can be cool, if you’re in Hollywood and everyone’s happy. But it can be really bad if people perceive that the financial interests are adversarial, that there’s money versus people. A lot of Goldman Sachs people went into government, so at a time when there’s a distrust of institutions, some of that reflects on us. And Goldman Sachs is successful, so there’s this feeling of ‘Ho-ho-ho, how’d you be successful? What did you do?’ ”
He may be right, but even in his Brooklyn twang, this argument is not particularly endearing—or satisfying to anyone who suspects the game to be rigged. Blankfein claims to have been humbled by the financial crisis. He points out that the firm recently completed a rigorous review of its business practices. “We’re going to come out of this productively,” he says. But the years of opprobrium have offended his sense of justice, and seem to have pushed him and his cohorts further into an intractable position: Goldman Sachs versus the world. “Look, I worry about these things, and I wonder how we slipped up and how are we behaving,” he says. “But I have a sense of who we are that’s inconsistent with what I perceive theirs to be. I’m not saying the world is crazy and we’re right, but I hope that’s the case.”