In 1975, he went to work at Goldman, in the company’s anemic bond-trading division. He was made a partner within five years, and shortly thereafter he became a member of the executive committee. “He was a hayseed when he arrived at Goldman, and he started at a low level in the fixed-income area,” says a former colleague. “But he quickly rose to handle government securities, which were the most important part of the fixed-income business, at a time when that business was taking off because of Reaganomics and the high government deficits.”
Not only was Corzine the lone rising star on Wall Street with a beard, he was the only heavy hitter who wore a sweater vest on the trading floor. (When he got the top job at Goldman, sweater vests conspicuously became a popular accessory.) But Corzine’s bookish appearance was misleading. “Like any good trader, he was always calm under pressure,” says another former Goldman partner. “But when he gets going, he has this great intensity and enthusiasm, and he drove things hard. It’s what made him effective.”
And there were times when he would, in his sweater-vest-wearing, full-beard-and-glasses kind of way, blow up. “These were never the cursing, screaming tantrums of the stereotype of a Salomon trader. But they were almost scarier because they weren’t screaming fits.” (Corzine told me he always apologized after losing it.)
Corzine’s big break came in 1994, when Goldman Sachs was going through an unusually difficult period. Following a series of trading losses, senior partner Stephen Friedman abruptly left the company along with three dozen other partners who followed him out the door, taking their capital with them.
“There was no plan for a successor, and everyone knew they had to have someone step in quickly,” says one partner. “So overnight they named Corzine to head the firm. It wasn’t something the partners went off and voted on. It happened very suddenly.”
Corzine appeared to rise to the occasion. He stopped the exodus of the partners, and within a year, according to those familiar with the situation, the company was stabilized. Several years of prosperity followed. Hank Paulson, who had been named Corzine’s No. 2, was eventually promoted to be co-chief of the firm. With Corzine and Paulson sharing power, the two often antagonistic sides of the business were equally represented—Corzine was a trader and Paulson an investment banker.
Things began to unravel near the end of 1997. Corzine had become convinced, ever since the crisis that resulted in his getting the top job, that Goldman needed to go public. And he began to push hard for this change.
“You can’t run a company with a $300-to-$400 billion balance sheet doing business in 26 countries, with all of the problems that can occur in that industry, with a nineteenth-century capital structure,” Corzine says. “We needed to protect the company.”
However good an idea, an IPO meant scrapping 130 years of tradition of running the company as a partnership. The change did not go down easy. There were many at Goldman who refused to let go of the romantic idea of the Goldman partnership, of the company where teamwork and camaraderie flourished and the needs of the individual took a backseat to the greater good.
Corzine knows that his push for the IPO caused friction with some on the management committee. But there were other issues as well. “I think things really started to unravel when Corzine began acting as if he was actually the chief executive of the firm,” says one former partner. “He began to make some decisions on his own, and in a partnership, you have to cajole and plead and convince the other partners to do what you want them to do.”
Corzine says that he is proud of what he did at Goldman. The IPO did go through, and many of the partners made as much as several hundred million dollars each—Corzine included. “It’s the kind of thing you have to do in life,” he says, as the buzzer on the wall of his office sounds, indicating that a floor vote in the Senate will take place in fifteen minutes. As we head to the basement of the Hart Senate Office Building to take the little automated train to the Capitol Building, he finishes his thought.
“You don’t acquire capital so you can stuff it in your casket when you die,” he says as we get on the train for the two-minute ride. “And you don’t acquire political capital not to expend it. You have to seize opportunities and do the right thing, even if there’s some personal cost involved. Goldman will be a lot better for what we did for a very long time.”