Goldman Sachs CEO Lloyd Blankfein just finished speaking at the Dealbook Conference at One World Trade Center with Andrew Ross Sorkin.
He's talked about a number of topics from the US economy, oil, China and 2016. He also cracked a few jokes, too.
As he walked out on stage, Sorkin pointed out that he's grown a beard (He's actually had that beard for a long time now).
"I thought you said 'since then you've grown,'" Blankfein joked.
The conversation began with the US economy.
"I say in the US it feels like the economy is in good shape. The markets may be more supported than warranted...because we are in a situation where we have trend or above trend growth and money policy...that's a good combination."
Lower oil prices:
Sorkin asked him if lower oil prices can be bad.
"Well you can make a short term or sector bad call, ah bad aspect to it. So for example, a big percentage of capital investment in the US is in the oil sector, if they withdraw that, that in the short term is a negative."
You can also look at lower oil prices as a "blessing" and think of it like a tax cut.
China:
Sorkin pointed out that China appears to be slowing down. He asked Blankfein if he believes the econ numbers coming out of China.
"Do I believe the numbers? I believe there are numbers," Blankfein said.
"I would say that it's very hard to gage," he said. "I'm not sure what they're measuring. I think it's a less sophisticated capital allocation system. I'm not sure that they are collecting the data we would..."
"You don't think they're manipulating the numbers?," Sorkin asked.
"I don't know. How do you I know?... I'd say my overall view of China is that over the long term they are going to do very well. I've said this other times before. This could very well be the Chinese century the way the 20th Century was the American century."
"Their economy is going to be bigger than our economy even though they are going to be poorer on a per capita basis."
2016:
Sorkin said he heard that Senator Rand Paul will be visiting Goldman's offices next week.
Blankfein explained that they have a speaker program and recently had former Yankees player Derek Jeter and Cardinal Timothy Dolan at the 200 West headquarters.
Sorkin asked him who he is supporting.
Blankfein joked that he's supporting Jeter.
Sorkin pointed out he has been a strong supporter of Democrats in the past.
Blankfein did say that he's "always been a fan of Hillary Clinton." What's more is Blankfein said he doesn't see Clinton's relationship with Wall Street as a liability.
Image may be NSFW. Clik here to view.Perhaps the greatest rivalry on Wall Street is the one between the investment bankers and the traders. This rivalry gets especially competitive during bonus season.
Goldman Sachs decided to raise the stakes in this epic battle, and for the past month, Goldman traders and bankers have been squaring off in a new firmwide fitness challenge.
The traders came out victorious.
Goldman's inaugural "Team Fitness Challenge" was hosted by Goldman Sachs' Veterans Network, which is an internal employee-affinity network focused on recruitment, mentorship, and career development of veterans at the firm.
Goldman Sachs associate Michael Hanna, who served in the US Army and organized the challenge, said that in the military there were always competitions between squads and units. These competitions, he explained, helped build morale and cohesion.
"We felt like it would be a good idea to do a competition between the divisions to build that espirit de corps."
Image may be NSFW. Clik here to view.The competition, which began in November in honor of Veterans Day, let bankers and traders go head to head in a series of events, including rowing 5000 meters and biking at max effort for 30 minutes inside the Goldman Sachs gym.
Those who participated had to post photos of their results from the rowing and biking. One even shared a photo of bloodied hands from the rowing machine.
The challenge ended on Monday with a 5K race at 7:30 a.m. along the Hudson River.
There were rules, of course. The teams from each division had to be coed and they had to represent three age categories: 20-34, 35-44, and 45 and up.
"It's also fun to put the other divisions in their place," Owen West, 45, a Goldman partner and captain of the Securities Division team, told us after finishing his 5K run in 17:49.
"There's a very healthy rivalry. We wanted to test two theories today — whether a sound body equals a sound mind? And can a banker wake up at 7? We proved both concepts. Yes and no."
Traders and bankers have completely different cultures. Traders are at their desks by 7 a.m., while investment bankers tend to stay up late working on deals and socializing with clients.
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The Securities Division team was stacked with athletes, including two former Princeton runners, Peter Bartlett and Sarah Cummings. Both are elite marathoners.
Cummings, who runs 100 miles per week while working full-time for Goldman, may try out for the Olympic marathon team. The traders' team also had Brian Kuritzky, a former Cornell soccer player who was the fastest Wall Streeter in the 2012 Empire State Building Run.
West was no slouch before he got to Goldman, either. He served in the US Marine Corps, and before that he rowed for Harvard and raced 400 miles across Borneo. His efforts garnered him the title "most badass" on Wall Street from Business Insider's Linette Lopez.
Peter Bartlett was the top male finisher. The top female was Paige Madden, a former Cornell rower.
On Tuesday, Goldman Sachs CEO Lloyd Blankfein presented the Bronze Boot trophy — a bronzed combat boot that has completed three tours in Iraq.
Image may be NSFW. Clik here to view."I would have participated, but since I knew I would be giving out the award, I felt there would be a conflict," Blankfein joked.
Blankfein also asked where the other divisions were during the ceremony on the 43rd floor of Goldman's 200 West Street headquarters.
"Where are they? Are they represented here at the awards ceremony?" Blankfein asked.
"Well, no, they lost." West said.
Maybe next year.
Until then, the trophy will remain on the trading floor.
Masters of the Universe aren't known for having anything resembling a jewelry collection except for one item — a watch. They're collectible, gorgeous and at times incredibly expensive pieces that can be handed down from generation to generation
Exactly the type of thing a titan of any industry would want.
We've put together a list and commentary about the wristwatches worn by some of Wall Street's most public executives.
As expected, a couple of the watches are flashy. A few of them are really, really cheap by Wall Street standards. And one prominent banker doesn't even wear a watch. Ever.
(If you know of the type of timepiece that an executive at your firm wears, feel free to send the tip to jlaroche@businessinsider.com)
Oil magnate T. Boone Pickens also wears a yellow gold Rolex Day-Date that he purchased in 1964.
Lloyd Blankfein, Goldman Sachs CEO
Image may be NSFW. Clik here to view.Goldman Sachs CEO Lloyd Blankfein rocks a Swatch with what appears to be a clear plastic band. Swatch's tend to range between $50 to $245. It's also not exactly the sort of timepiece you'd expect a chief executive of a Wall Street investment bank to wear. Then again, Goldman is "the most hipster" bank on Wall Street.
"I received in the mail a wristwatch from a devoted shareholder in California. On the dial were printed our Vanguard logo, my name, and a phrase that was an indication I was still looking out for our shareholders: "Still on Watch." It was also an outrageous pun: "Still on Watch." Confident that it would be my rabbit’s foot, I put the watch on my wrist, where, having proved itself, it remains to this day. (Yes, I knew about the $50 limit on gifts. So I checked the catalog for the price. It was $14. Talk about value!),"he wrote.
Bond guru Jeff Gundlach, CEO of DoubleLine Capital
Image may be NSFW. Clik here to view.We learned about Jeff Gundlach's watch collection when he had a bunch of his artwork and personal property stolen.
According to the Santa Monica Police Department report, the watches that were stolen included a Glashutte, Breitling, A. Lange & Sohne, TAG Heuer and a Patek Philippe. We couldn't nail down prices for these specific models, but every one can run in the tens of thousands of dollars or more.
Hedge fund billionaire Bill Ackman, CEO of Pershing Square
Image may be NSFW. Clik here to view.Bill Ackman, the CEO of Pershing Square Capital, sports a watch with a black band and dark face. We can't identify the watchmaker, though.
Image may be NSFW. Clik here to view.Hedge funder Phil Falcone wears a black sports watch (it looks like Casio G-Shock) and some friendship bracelets and beads (We're assuming his twin girls made those for him).
There have been significant push-backs against regulation across industries, but Goldman Sachs' CEO Lloyd Blankfein has taken a rather neutral stance in the debate.
Regulation "is like background noise. It's like music. You ask me how much time do I spend with music, a lot of time, but I'm doing other things at the same time," Blankfein told Bloomberg' Stephanie Ruhle in an interview, adding that he wouldn't call regulation oppressive, per se.
"It affects almost everything we do. I can't think about our technology spend without thinking of the number of heads I have to hire to build the systems to comply with the new regulatory reporting functions. So it is a fact of life, but no choice, no problem. It's something that we have to deal with," he added.
In other words, you won't hear him complaining about regulation (at least not to the media). Ruhle brought that up by mentioning JP Morgan CEO Jamie Dimon, who has been outspoken about his feeling that post-financial crisis regulation can overreach and hurt business.
Blankfein simple responded: "I'm not Jamie Dimon."
Regulation's also become a touchy issue in the financial advisory industry where coalitions have been popping up stating that "there are insufficient regulations for financial planners and members of the public are the ones being hurt because of it."
Aka: regulators say that financial advisers keep scamming clients who aren't well-versed in the finance game — and that needs to be stopped.
You can watch Lloyd Blankfein's whole interview with Bloomberg below:
In honor of Valentine's Day, we've decided to feature some of the hottest power couples on Wall Street.
The range here is wide. We have fund managers who date well-known actresses. We have bankers who are married to attorneys and television anchors. We even have someone who is married to a princess.
Fun Fact: The couple is currently trying long distance with Pippa in England and Nico in Switzerland.
Chelsea Clinton and hedge funder Marc Mezvinsky
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Status: Married
Her: Chelsea is the daughter of President Bill Clinton and former Secretary of State Hilary Clinton. She has previously worked for Mckinsey & Co., Avenue Capital, and was a correspondent for NBC.
Him: He's a partner at Eaglevale Partners LP. He has previously worked at Goldman Sachs and New York-based hedge fund G3 Capital.
The New York Times threw shade at Bill and Hillary Clinton's son-in-law, Marc Mezvinsky.
The article by Matt Goldstein and Steve Eder suggested that Mezvinsky, who is married to Chelsea Clinton, had been able to get access to investors with ties to the Clintons for the hedge fund he cofounded that has had "underwhelming returns."
Back in 2011, Mezvinsky, now 37, and two former Goldman Sachs colleagues — Bennett Grau and Mark Mallon — began raising money for Eaglevale Partners LP.
Some of Eaglevale's investors include hedge fund billionaire Marc Lasry and Goldman Sachs CEO Lloyd Blankfein, the report said.
Lasry, a long-time Clinton friend, runs Avenue Capital, where Chelsea previously worked after graduating from Stanford. Lasry told The Times that he "gave them money because I thought they would make me money."
A Goldman spokesman told The Times that Blankfein invested in Eaglevale because of his relationship with Grau, the fund's chief investment officer. At the DealBook Conference in December, Blankfein, who has been a strong supporter of Democrats in the past, said he had "always been a fan of Hillary Clinton."
Hillary Clinton is expected to announce her presidential campaign soon.
But one source said Mezvinsky didn't raise that much money.
A person briefed on the matter and close to the firm said the amount of investor money recruited by Mr. Mezvinsky is not large, amounting to less than 10 percent of the firm’s total outside capital. Clinton supporters also say there are more direct ways to cultivate favor with the family, such as giving to the foundation, where Chelsea Clinton is vice chairwoman, than by investing with a hedge fund that her husband co-founded.
People in Hong Kong love their supercars... and their vanity plates. Just watch this. (This is also one of my favorites.) So why would the employees of Goldman Sachs be any different? Good news, they’re not.
We spent five minutes (literally one lap) last week driving through the parking garage at Cheung Kong Center, home of Goldman Sachs Asia, and here are just a few of the highlights.
The premise is more light-hearted and whimsical than it is literal exposé - I have no idea who these cars actually belong to. Although Goldman Sachs is the largest occupant in Cheung Kong, other tenants include Jefferies, RBS, BlackRock, and of course, Li Ka Shing, who has an indoor pool and private garden on the top floor.
The amazing thing is that, as is customary in the region, most senior bankers are chauffeur driven (A Filipino driver costs a mere $1,500 a month), so this isn’t even the most accurate (or ostentatious) reflection of reality.
Just to put this slideshow into perspective, you need to understand how much more expensive luxury cars are in Asia. According to Mercedes Benz, a new S600 sedan that runs $166,900 in the US will set you back $386,000 in Hong Kong– or 21 years of servitude for a Pilipino chauffeur.
Mercedes SLS AMG
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$400,000
“This country does a great job of creating wealth, but not a great of distributing it. But I don’t want to do something that stops our ability to build wealth.”
Lloyd Blankfein
Lamborghini Huracan
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$450,000
"The tradition of individual philanthropy remains a core tenet of our culture."
"Current and retired senior employees of the firm granted over $400,000 via Goldman Sachs Gives to One Fund Boston to assist victims and families affected by the tragic events at the Boston Marathon."
Goldman Sachs
Ferrari 612 Scaglietti
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$250,000
"This is a sensitive time for us, and [the firm] wants to make sure that we're not being seen living high on the hog."
Anonymous Goldman Sachs employee (via New York Post)
It recently overtook JP Morgan for the top spot after that bank sold a chunk of its commodities business to Mercuria Energy Group, a trading house.
Here's why this might sound like a crazy move: post-financial crisis regulation forbids investment banks from owning global commodities businesses – investments the banks are making with their own money.
Soon, banks will need to spin off these investments, and while the Fed recently voted to extend that deadline from 2017 to 2019, most other banks are starting to get out now.
Credit Suisse, Deutsche Bank, Morgan Stanley, and now JP Morgan are scaling back. So why is Goldman amping up commodities investments?
Likely because they can pick up these commodities businesses, cheap, in a firesale – and make money in the process.
Remember, the bank is not violating any laws. It's just waiting until the last second to unwind. Until then, Goldman will remain king of commodities.
The Wall Street Journal used a curious argument to to support the idea that CEO pay in the banking industry has gotten more conservative in recent years. It's almost enough to make one pity Lloyd Blankfein.
The Jamie Dimons of the banking business are making a meager 124-times what the average employee at their company makes, The Wall St. Journal said, and that's down from 273-times what 'Joe Banker' pulled in as of 2006.
The Journal takes that to mean that big banks' CEOs aren't seeing their 1%-pay rise commensurate to the rank-and-file who, for years, watched their pay languish compared to their baller bosses. So this inequality thing can't be that bad, right?
But that comes as inequality, as measured professors by Juan G. Rodriguez and Gustavo Marrero, is tracking all-time highs. Rarely has the gap between the 1% in this country and everyone else been as great.
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Yes, the average banking employee's pay is rising, again. Still, in New York, it still hasn't hit what it was before the financial crisis. It's doubtful any of these people care how many times their income Jamie Dimon earns.
If pay is increasing in other cities, it isn't clear. But, jobs are growing, and everywhere but in New York. Numerous Wall St. firms have tried to reduce costs by jettisoning staffers to places like Salt Lake City, which has a far lower cost of living.
If shipping employees to the middle of the United States to keep cost down doesn't reflect inequality within the industry (while all the bosses get to keep digs on Park Ave. and elsewhere), it's unclear what does.
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And, using regulatory filings (which is what the WSJ says it did as part of its analysis) excludes one very important piece of information: break-downs of how many bankers, compared to tellers, remain with each institution. One need not dig too far into WSJ's archives before realizing that staffing levels throughout the industry are down double digits since the financial crisis.
Another thing the WSJ piece doesn't explain is how, for some firms, CEO comp might have fared were several of Wall Street's biggest not paying billions in Department of Justice fines.
In short: yes, the ratio of CEO pay to that of the average employee is less than what it once was. But an argument for improved equality on Wall St., that does not make.
It's bound to warm up soon and that means Wall Street will start leaving the trading floor for the golf course in the afternoons.
For right now, though, we expect they'll start switching the channel on the trading floor TVs to the Masters.
To commemorate the big golfing event, Business Insider combed through the latest handicap data for some of the Street's biggest names on GHIN—a website run by the U.S. Golf Association— to see how they stack up against each other on the fairway.
Some of these golfers are very, very talented, while others could use a bit more practice. Take Goldman Sachs CEO Lloyd Blankfein for instance. He seems to find shooting low scores a difficult endeavor.
Keep in mind, the higher the handicap number, the worse the player is in comparison to others with lower handicaps.
Also, JPMorgan's CEO Jamie Dimondoesn't golf.His two predecessors at JPMorgan were members of the prestigious Augusta National Golf Club though.
Lloyd Blankfein (Handicap: 23.4)
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Firm/Title: Goldman Sachs, CEO
Where He's Played: Blind Brook Club, East Hampton Golf Club, Sebonack Golf Club and Manhattan Woods Golf Club
Image may be NSFW. Clik here to view."Every year, Lloyd would give the tech division an annual speech, saying how we were a tech company," a former Goldman Sachs engineer said to Business Insider.
Lloyd is Lloyd Blankfein, CEO of Wall Street investment bank Goldman Sachs.
And believe it or not, Goldman has more programmers and engineers working on tech matters than Facebook.
According to Goldman's tech team members who spoke with Business Insider, of about 33,000 full-time employees at the bank, 9,000 of them are engineers and programmers.
Facebook's total payroll, which includes non-tech personnel, consisted of 9,199 workers as of the last day of 2014, it said in its annual filing with the SEC. That number includes the many non-tech employees who are there to support and sell the product.
Goldman's 9,000 also eclipse the entire payrolls of Twitter, which has 3,638 employees, and LinkedIn, which has 6,897 employees. Facebook and Twitter don't offer breakdowns of their staffs. In its filings, LinkedIn reveals that more than half of the employees work in non-tech functions including sales, marketing, and general and administrative capacities.
Assuming the employee mix at Facebook was something like LinkedIn's, it becomes very easy to see how Goldman might employ twice as many programmers and engineers than Facebook.
The massive on-boarding of tech talent shows just how seriously investment banks regard technology as a means of security and infrastructure. It also highlights the needs of the financial services industry at a time when programming talent is at a premium in numerous sectors.
In New York, it's a common complaint of venture capitalists and CEOs that the cream of the technology crop is regularly scooped up by Wall Street.
Competing head-to-head with tech giants and startups
“We do end up competing for talent with startups and tech companies,” said Paul Walker, Goldman Sachs’ global co-head of technology.
And, because Goldman still employs more people in New York City than anywhere else, this means continued plans to staff up where the bank is headquartered, although it still has engineers spread out across the US in places like Salt Lake City, and in 15 other countries as well.
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Among the thousands of tech specialists are platform engineers, engineering business analysts, liquidity managers, compliance professionals and (of course) programmers fluent in technology to optimize trading.
Goldman doesn’t break down what its programmers do by category.
The bank has made numerous investments in technology and financial services in post-crisis years. Among other things, the bank has invested in, and continues to work on, the development of a messaging platform called Symphony that could challenge the popular service used for years at Bloomberg LP.
Other banks were less than forthcoming about tech teams, when contacted by Business Insider: Morgan Stanley, JP Morgan, Citigroup and Bank of America each declined to discuss their headcount or the percentage of their workforce that is made up by technology specialists.
It's common for investment banking tech professionals to cycle between the largest top-tier banks, an ex-Goldman employee said. The source said that, at hedge funds, which regularly try to pick off programming talent, private firms often impose lengthy non-compete agreements that can keep engineers out of work for a year, sometimes more. Aside from top hires, however, bank holding companies do not impose such strict terms.
Elsewhere in the banking industry, executives have said Goldman’s tech team is by far the largest, proportional to the rest of its organization.
There is a drawback to joining Goldman's tech team, the source said: experience working with Slang, the proprietary programming language used within the firm, doesn't have much use outside the bank.
A lot of this is about regulators' demand for tighter controls
The broader focus within banking to add programmers comes as there is a rising expectation that banks should, and will, do more digitally to (among other things) support compliance.
Recently, technology failures and compliance issues landed financial firms in hot water in New York. Earlier this month, German firm Commerzbank agreed to pay nearly $1.5 billion and dismissed certain employees after it was found to have processed tainted money from sanctioned parties — something that New York Department of Financial Services Superintendent Benjamin Lawsky has repeatedly cautioned Wall Street professionals to better monitor.
“Unquestionably, changes in technology and the way our system is changing because of their emergence has made the need to get tech ‘right’ paramount,” said Lawsky. “The next couple of years are changing the face of banking as we know it… getting tech right, is so important.”
Whether it's in the compliance office or a billion dollar algorithm-driven trading desk, Wall Street is increasingly becoming more about tech.
This chart shows what Goldman spent on compensation over the last 14 years. It's from a presentation that Blankfein delivered earlier this year:
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While average pay at Goldman has flattened in recent years, this is not the case in the C-suite.
Looking at federal filings submitted by Goldman Sachs, from 2010 until the end of last year, Blankfein's rose every year but one: 2011. From 2010 through 2014, Goldman's CEO saw his pay increase by more than 13% annually.
Filings stated that, in 2010, he made $18.6 million; the following year, Blankfein's pay sunk, to $12 million. And after that, it shot up: $21 million in 2012, $23 million in 2013, and $24 million last year.
Likewise, COO Gary Cohn's compensation has risen at a steady clip.
Pay for Goldman's rank and file may soon be on the rise, as well. After years of lagging broader markets, many banks' revenue surged for the first quarter on increased M&A. And that, in turn, could drive compensation higher at many of Wall Street's biggest banks.
Wall Streeters aren't getting paid as much as they'd hoped.
Bloomberg Markets polled some 1,280 financial pros across the industry earlier this month and found that 48% of them are getting paid "less or much less" than they'd expected before entering the industry.
Those expectations aren't entirely unfounded — at least for those who got into the industry in the past eight years or so.
For a lot of the banks, the financial crisis led to cost cutting and heightened regulation, which has meant lower employee compensation.
Last year, Goldman Sachs spent the least amount of money on employee pay on record — barring 2009, according to Bloomberg. Employee pay made up 36.8% of revenue (in 2009, in the midst of the financial crisis, compensation was 36% of revenue.)
Bloomberg did the math and that averages out to some $131,000 less per person than employees were making in 2007, before the crisis. So it's no wonder Wall Streeters are feeling a little shortchanged.
But whether that shrinking compensation extends to the executive level is another question. Goldman CEO Lloyd Blankfein's compensation rose by $1 million last year from the year prior, to a total $24 million. Since 2010, it's risen an average 13.3% annually.
At Morgan Stanley, CEO James Gorman saw his pay jump by a third. And while CEO pay at the major banks has dropped considerably in comparison to the average employees', it's still at a healthy 124 times the average banker's pay.
Image may be NSFW. Clik here to view.Goldman Sachs is continuing to find new ways to open up to the public.
The investment bank recently launched a podcast series called "Exchanges at Goldman" and available on iTunes. Wednesday's episode features the bank's CEO, Lloyd Blankfein.
For the most part, Blankfein doesn't say anything surprising.
However, one small detail is worth highlighting. Blankfein reiterated that Goldman Sachs is a technology company since it has 9,000 programmers.
He also noted that upstart tech companies will have a hard time disrupting Goldman because of how heavily regulated it is. Our emphasis added here:
Now I’ll tell you something interesting else about our industry: That all industries are being disrupted to some extent by new entrants coming in from technology. We, again, being, you know, technology-oriented ourselves, try to disrupt ourselves and try to figure out what’s the new thing, and come up with new platforms, new forms of distribution, new products. But in some ways, and there are some parts of our business, where it's very hard for outside entrants to come in, disrupt our business, simply because we’re so regulated. You’ll hear people in our industry talk about the regulation. And they talk about it, you know, with a sigh: Look at the burdens of regulation. But in some cases, the burdensome regulation acts as a bit of a moat around our business. I’m not saying that that's intended, I’m not saying it's good for the industry, I’m not saying that’s something that we even like. I’m just reporting to you that there are parts of our business that in order to be in it, you have to be a regulated entity, and be a bank holding company and take on certain burdens that go with that.
He is right! And this probably explains, in part, why technology companies like Google are so heavily anti-regulation. They want open, free markets so they can attack new industries like the banking sector.
"The podcast series is part of the firm’s ongoing efforts to communicate with the broader public in a positive, substantive way," John F. W. Rogers, executive vice president, and Jake Siewert, head of corporate communications, wrote in a memo to employees.
The 11th episode with Blankfein touches upon a number of topics, including the impact of technology on Wall Street, challenges and opportunities in China, the US' policies on trade, energy, and infrastructure, how to deal with inequality, as well as some book recommendations. (Blankfein loves history books.)
Since December, the podcasts, which feature interviews with different people at Goldman, have been downloaded and streamed almost 200,000 times.
Siewert, a former Tim Geithner aide and Clinton administration press secretary who joined Goldman in 2012 as the PR chief, is the anchor of the series.
In the last three years, Goldman has been more proactive about boosting their public image. The bank joined Twitter, and has since mastered the social media network. They've also had their executives make media appearances and write op-eds.
In this business, if you don't tell your story someone else will, and then folks will only think of you as a "Vampire Squid."
You can listen to the podcasts on iTunes, GS.com, and Stitcher. We've pulled out a few excerpts from Blankfein and Siewert's 30-minute podcast below. You can find links to more episodes below that.
Technology on Wall Street:
Siewert: Yeah. So bringing it closer to home, how do you see technology changing Goldman Sachs and the financial services industry? We recently announced we’re bringing in a businessperson from one of the major card companies to look at an online lending platform here at Goldman. How might we see technology continue to reshape our own industry?
Blankfein:You know, it’s very ... when you ask about technology in our own industry, I'd like to point out that we’re obviously a key player within our industry. We have something like 35,000 people in the firm; something over 9,000 of them are in technology. So when you ask me how is technology ... what might this technology be doing to disrupt the industry or our company, it's a little bit of a funny sentence. Because we are a technology company. So ...
Siewert: Disrupting ourselves.
Blankfein: Well, not so much disrupting it.
Siewert: Yeah.
Blankfein: Which of course everybody does to some extent. But technology is a core competence of ours. So I’m going to rework your question and say how is technology affecting the way we do our business all the time, and other entrants to the business? And so you could see there's a lot of new companies forming around payments, around forming algorithms to create, prices and valuations. New modes and platforms distributing the product, which very often includes pricing information. Very often pricing is the product that you're distributing. Things get done faster; things are done with more leverage. And then there are things that are being done, so for example, things are structured that couldn't be done any way but through technology. In other words, the speed doesn't just make things faster, and the efficiency doesn't make things just cheaper, it actually allows you to do things that you otherwise wouldn't be able to do. And that's, by the way, happening now. But, by the way, it's been happening all along. Now I’ll tell you something interesting else about our industry: That all industries are being disrupted to some extent by new entrants coming in from technology. We, again, being, you know, technology-oriented ourselves, try to disrupt ourselves and try to figure out what’s the new thing, and come up with new platforms, new forms of distribution, new products. But in some ways, and there are some parts of our business, where it's very hard for outside entrants to come in, disrupt our business, simply because we’re so regulated. You’ll hear people in our industry talk about the regulation. And they talk about it, you know, with a sigh: look at the burdens of regulation. But in some cases, the burdensome regulation acts as a bit of a moat around our business. I’m not saying that that's intended, I’m not saying it's good for the industry, I’m not saying that’s something that we even like. I’m just reporting to you that there are parts of our business that in order to be in it, you have to be a regulated entity, and be a bank holding company and take on certain burdens that go with that. And a lot of people around ...
Challenges/Opportunities in China:
Siewert: Shifting continents. You're heading to China next month. You go there regularly, and have often said that this will be China’s century. What do you think about the immediate challenges facing the leadership of that country, and the business community there?
Blankfein: Well, this certainly has the potential to be China’s century, because China is very much on trend to soon being the largest economy in the world. That doesn't make it necessarily the wealthiest country in the world because it has so many more people. So, again, you have something like three or four times the population of the United States. It should have a bigger economy, and it shortly will.
But still a lot of challenges and a lot of problems owing to the population and the relatively low state of the development of their markets. And the immaturity of a lot of their industries. And a lot of work to do. And still a lot of the population is in poverty. China has accomplished great things in the last couple of generations. And even though great things have been accomplished, they've created even higher expectations. I'd say that over the last few decades, China has stressed growth.
They needed to have growth; they needed to be able to provide jobs for people coming in from the countryside, from the villages into the city. You need that migration to take place because that's how per capita wealth gets generated. By having people come to the cities, and generate revenue for industry. To give people a higher standard of living in the cities than they would otherwise have in the countryside.
And by the way, in a country that doesn't have a lot of accumulated wealth, in order to generate that industry, you create things for export. Which is what they did. That business model can only last so far. So what they've done is they've created an economy heavily dependent on exports, an economy in which growth was exalted over other considerations. And in order to achieve growth, they were perhaps a little bit reckless, with the environment. In other words, if you are pursuing headlong growth, maybe you're a little bit reckless about where you locate your power facilities, whether you take care of environmental issues, where you ...
Siewert: Sources of energy.
Blankfein: Sources of energy, how you get rid of waste. Because it's growth, growth, growth, growth, growth. You have to curb growth if you want to take into account other things like, you know, the quality of the air and the quality of the environment, kinds of health issues. So they have to deal with that corruption of the environment.
The other thing that they have to deal, and they're quite upfront about this, is they have to deal with another kind of corruption; the corruption of certain officials within the political system. And I think this is known ... when you're spending money very quickly and you're trying to stimulate growth at any cost, and in some cases you're being careless about the nature of the growth and what you're stimulating, and not necessarily auditing things as meticulously as you would, because after all, you really, your number one priority is to grow quickly, there has been some corruption within China and they're trying to staunch that. And so in order to fix these things, create more consumer demand, protect the environment, to deal with the corruption issue, you're going to have to slow down growth from a headlong surge for growth, into something that's more sustainable in the long run; so accept a lower growth rate.
That's a very tough set of maneuvers to accomplish, and they're involved in those maneuvers right now. There's very capable leadership in China. I’m confident that they'll accomplish that, but it won't be frictionless.
Addressing Income Inequality in the US:
Siewert: You know, one of the tougher things that's bedeviled a lot of policymakers, and economists as well, is inequality. You've talked a lot about the need to address this. You hear Republican candidates talking about the right to rise, the opportunity society. You hear some Democratic candidates, obviously, talking on the need to better distribute income. What are some of the things that we could be doing as a country to address that issue more seriously?
Blankfein: Well, there's always an issue everybody wants to give everybody the equivalent opportunity. And there's always a debate where, do you want to give everybody the same opportunity at the starting line, and let people run the race at their own pace, and come out wherever they come out? Or do you want to adjust the outcomes? You know where people are relative to the finish line? And so not have people have such divergent fortunes, regardless of where they started.
And that's kind of a debate that comes out. I would say you certainly want to give people equivalence of opportunity, but how do you do that when people come from different families, different economic backgrounds, different sociologies? And so you'll never quite achieve that. And so you have to kind of weigh, you know. And you can't afford to have widely disparate opportunities. Because you won't necessarily have the most stable world.
That's why you have to have safety nets. You can't have a winner-take-all outcome. And so you have to raise the level of a safety net. And society has to accomplish both these things. And there's a tension. And people will be, you know, on opposite sides of this. But it's a band. I don't think anybody should be on any part of that extreme.
When former Maryland Gov. Martin O'Malley (D) launched his presidential campaign Saturday, his speech included shots at his better-known rivals and one of the biggest names on Wall Street, Goldman Sachs CEO Lloyd Blankfein.
"Recently, the CEO of Goldman Sachs let his employees know that he’d be just fine with either [Jeb] Bush or [Hillary] Clinton. I bet he would," O'Malley said.
"Well, I’ve got news for the bullies of Wall Street: The presidency is not a crown to be passed back and forth by you between two royal families. It is a sacred trust, to be earned from the American people, and exercised on behalf of the people of these United States."
O'Malley's populist ire wasn't limited to Goldman Sachs. In his announcement speech, he focused on income inequality, which he described as a situation wherein "Main Street struggles, while Wall Street soars."
He accused the "privileged and the powerful" of having been "the ones who turned our economy upside down in the first place" and lamented the fact "not a single Wall Street CEO was convicted to a crime related to the 2008 economic meltdown."
Though O'Malley is far behind Clinton in the polls, his comments have made waves on Wall Street. On Monday, Fox Business Network's Charlie Gasparino pointed to O'Malley's announcement speech and described him as "the last person" finance industry CEO's "want running in the Democratic Party."
"Did you hear what Martin O'Malley said the other day?" Gasparino asked his on-air colleagues. "He said it point blank, 'Do you want to elect the candidates that are supported by the CEO of Goldman Sachs? Well, that's Jeb Bush and Hillary Clinton.'"
"And I’m paraphrasing what he said, but he mentioned the CEO of Goldman Sachs. That's the last thing — Lloyd Blankfein doesn't want to be in the news anymore. He got the you-know-what kicked out of him back in 2009, 2010 following the financial crisis and Goldman Sachs was the poster child for all that's wrong on Wall Street ... They've been out of the news and they're back in it because Martin O'Malley and the liberals, the progressive left are going to make Wall Street a campaign theme."
O'Malley's campaign clearly didn't mind seeing him cast as Wall Street's worst 2016 nightmare.
His team sent out a press release on Monday highlighting the fact Gasparino called him "the last person [Wall Street CEO's] want running." It included a video of Gasparino's comments.
"This weekend, Governor O’Malley kicked off his presidential campaign and leaned heavily both into the need for more robust reform of Wall Street and for Democrats to nominate a candidate who is independent of the big banks," the statement said. "His position has apparently gotten notice."
Watch the clip of Gasparino's remarks below:
In a conversation with Business Insider on Monday, O'Malley campaign spokeswoman Haley Morris described cracking down on Wall Street excesses as a "top priority" in the candidate's economic agenda.
"He made it clear that the number one issue that he has zeroed in on is that rebalancing act of getting our economy working again and reining in reckless behavior on Wall Street," Morris said.
Overall, Morris said O'Malley would confront Wall Street with "a mix of structural and accountability reforms." She pointed to a column O'Malley wrote for the Des Moines Register in March in which he outlined some of the specific policies he would support.
These included "reinstating the 1933 Glass-Steagall Act" so that banks would be "broken up into more manageable institutions," picking appointees for agencies in a position to regulate the financial industry "who will prosecute those who commit or permit crimes," barring banks from deducting government fines from their taxes, and establishing a "three strikes and you're out" policy that would "revoke a bank’s right to operate if they repeatedly break the law."
Morris said O'Malley's positions on Wall Street provide an obvious contrast with the likely Republican 2016 candidates, whom she described as eager to roll back existing financial regulations.
"It's clear that Republicans would either want to water down accountability in Dodd-Frank or get rid of it entirely," Morris said.
Image may be NSFW. Clik here to view.Morris also suggested O'Malley's aggressive approach to Wall Street could differentiate him from Clinton. Morris accused the Democratic front-runner of being unclear about her positions on these issues.
"I don't think we know what Secretary Clinton would do and it's hard to comment on her positions," Morris said.
Clinton's campaign did not respond to a request for comment on this story. However, since launching her campaign in April, Clinton has made comments attacking the relatively low tax rates paid by hedge fund managers, and her team confirmed this was an indication of her desire to close the "carried interest" loophole, which shields some investment profits from taxes.
In January, Clinton reiterated her support for the 2010 Dodd-Frank financial industry regulation. Observers have also speculated Clinton's appointment of former Wall Street regulator Gary Gensler, one of the architects of Dodd-Frank, to be her campaign's chief financial officer was a sign she "is prepared to take a tougher stance toward the financial industry."
Clinton supported increased Wall Street regulation in her 2008 presidential bid and has clearly taken a populist approach in the early weeks of her campaign, but O'Malley's direct challenges to CEO's and call for prosecutions clearly puts him in a different category.
In his comments on Fox Business Network, Gasparino suggested O'Malley's recent remarks might drive Wall Street donors to provide stronger support to Clinton.
"That speech will probably force them to give even more money to Hillary," Gasparino predicted.
O'Malley doesn't seem remotely concerned about whether Wall Street will provide contributions for his campaign war chest. In an interview on ABC's "This Week" that aired Sunday, O'Malley cast himself as the only clear crusader against Wall Street excesses in the Democratic field.
"I don't know what Secretary Clinton's — approach to Wall Street might be. She will run her own campaign and I will run mine," O'Malley said. "I can tell you this. I am not beholden to Wall Street interests. There are not Wall Street CEOs banging down my door and trying to participate or help my campaign."
Fox Business Network correspondent Charles Gasparino claims a lot of his sources have been talking about Martin O'Malley since the former Maryland governor launched his White House bid on Saturday. And Gasparino says Wall Street is angry with the Democratic presidential candidate.
"Martin O'Malley is now like, I would say persona non grata — public enemy number one in in the halls of Goldman Sachs, in the halls of Black Rock, the big money management firm. All throughout Wall Street right now," Gasparino said in an appearance on Fox Business on Tuesday.
"Recently, the CEO of Goldman Sachs let his employees know that he’d be just fine with either [Jeb] Bush or [Hillary] Clinton. I bet he would," O'Malley said, adding, "Well, I’ve got news for the bullies of Wall Street: The presidency is not a crown to be passed back and forth by you between two royal families. It is a sacred trust, to be earned from the American people, and exercised on behalf of the people of these United States."
Gasparino expanded on that analysis Tuesday. He claimed the financial industry "was not expecting" a presidential candidate to adopt the kind of aggressive approach towards Wall Street. Further, Gasparino suggested that even though O'Malley is polling far behind Clinton, there are fears his message could resonate and push Clinton "to the left" on Wall Street.
"Right now people on Wall Street are talking about Martin O’Malley. Now does he have a chance to win? I’m not a political guy, it would seem like odds are low based on everything that I know," Gasparino said, later adding, "What they're really worried about is not that he's going to win. It’s that he's going to force [Clinton] so far to the left with that resonating message."
Gasparino said Wall Street fears this O'Malley effect could stop Clinton from doing "some of the things they want her to do like water down Dodd-Frank."
"They really think that if she gets in there, that if Hillary Clinton gets in there, that Dodd-Frank will be watered down to the point where they can do proprietary trading using their own capital to trade which is outlawed right now. And various aspects of Dodd-Frank will be freed up so the banks can go back to making a lot of money," Gasparino explained. "Not that they don't make a lot of money now, but even more money, Clinton-era money."
Though she hasn't targeted Wall Street with the same type of fiery rhetoric O'Malley unleashed in his announcement speech, Clinton has said she supports Dodd-Frank. Clinton has also given other indications that, if elected, she plans to take a relatively tough stance towards the financial industry.
Watch Gasparino's comments below.
O'Malley's team seems to relish the idea Wall Street is afraid of him. O'Malley spokeswoman Lis Smith emailed reporters a video of Gasparino's analysis on Tuesday as she did with the similar statements the Fox Business personality made on Monday. In her most recent message, Smith described Gasparino's remarks as proof of "how O’Malley’s message is resonating on Wall Street."
While the remarks O'Malley made about Wall Street in his announcement speech have clearly earned him attention, they weren't entirely accurate. In a post published on Tuesday, the fact-checkers at Politifact described O'Malley's comment that "the CEO of Goldman Sachs let his employees know that he’d be just fine with either Bush or Clinton" as being "mostly false." Politifact noted Goldman Sachs CEO Lloyd Blankfein " has thrown his weight and money behind Clinton publicly, but he hasn't done the same for Bush."
Smith, O'Malley's spokesperson, responded to this correction on Twitter where she seemed satisfied Blankfein was identified as a Clinton backer:
Gorman reportedly goes home every night and writes down his bank's results – by hand.
At work, he keeps a folder with 10 priorities on his desk and checks them off – in red ink – as he works his way through them, according to the report.
Unlike "rival" Goldman Sachs, the only other stand-alone investment bank in America, Morgan Stanley sets goals for things like the bank's return on equity, assets under management, and compensation ratios.
But once the targets are set, Gorman tries not to micromanage.
He said that, without him, the bank would still do just fine. So he tries to focus on specific areas where he can make improvements.
“Each year I try to focus on about 10 priorities that I personally will get involved with,” Gorman reportedly said at Morgan Stanley's annual meeting this year.
Lloyd Blankfein, the CEO and chairman of Goldman Sachs since 2006, is now a billionaire.
The legendary Wall Street titan, who grew up in a housing project in Brooklyn and ended up earning degrees from Harvard University, has seen his net worth surge to $1.1 billion (£704 million).
According to the Bloomberg Billionaires Index, the massive surge in his wealth is due to his being the largest individual shareholder in the investment-banking giant Goldman Sachs, which manages nearly $911.5 billion (£583 billion) in assets.
Goldman Sachs' share price has quadrupled since the firm went public in 1999. Blankfein has a $500 million (£320 million) stake in the group. His ownership of 2.24 million shares makes him the bank's largest stockholder. He also has around $600 million (£384 million) from a real-estate and investment portfolio.
In Goldman's second quarter this year, earnings came in stronger than expected. The firm reported a 13% rise in investment-banking revenues, when compared with the same period last year.
In the investment-management division, revenues were $1.65 billion, or 14% higher than the year-ago quarter and 4% higher than last quarter. The bank said that was due to higher fees.
The bank CEO now has an estimated $1.1 billion net worth thanks to the rise in Goldman's stock price. (About $500 million of his worth is in Goldman's shares, Bloomberg calculated).
What's really remarkable about Blankfein, though, is that he's someone who comes from humble beginnings. He's the epitome of the "American dream."
Blankfein was born in the Bronx. He grew up in Brooklyn in the Linden Housing projects. He shared a small apartment with his extended family, including his grandmother, his sister, and his nephew.
His father sorted mail for the post office. He worked the night shift because it paid about 10 percent more than the day shift. His mother worked as a receptionist at a burglar alarm company. Blankfein later joked that it was "one of the few growth industries" in the neighborhood.
To earn extra money, Blankfein began working as a lifeguard. He also served concessions at Yankee stadium, according to Fortune magazine.
Image may be NSFW. Clik here to view.Blankfein was a good student. He attended Thomas Jefferson high school, which no longer exists as a high school.
He did well because he wanted to succeed. One of his favorite pastimes was, and still is, reading historical biographies. He later said he especially liked biographies about people "who started out unimportant but ended up having a significant life."
Blankfein, who was a champion swimmer, graduated as his class' valedictorian. He earned a scholarship to Harvard. Leaving for college was the first time Blankfein left New York City.
College life wasn't easy.
Blankfein came from a lower-income background compared to many of his peers and he had to work in the cafeteria to makes ends meet. He later said he found college "intimidating" and he felt "insecure." Those feelings made him want to work harder.
As he became more comfortable at Harvard, Blankfein became even more driven by ambition. he realized that he belonged. He was driven to succeed.
Blankfein described that sense of ambition to a group of college graduates in 2013.
"Ambition is your inner voice that tells you you can and should strive to go beyond your circumstances or station in life. You have overcome obstacles, pressures and self-doubt and you have done it because you have ambition. You want to succeed for your families and yourselves. And there is no more powerful force through which to do that than through education and know how."
Image may be NSFW. Clik here to view.After graduation, Blankfein attended Harvard Law. He practiced for a while, but he wanted to get into finance.
He applied to a number of firms, including Goldman Sachs, but was turned away by all of them. He took a different route for getting to Goldman.
But then J. Aron & Company was acquired by Goldman Sachs, and Blankfein was in.
During his time at Goldman, he has led the Fixed Income, Currency and Commodities (FICC) division. He also served as president and COO. He became the CEO of Goldman since 2006.
Of course, with the 2008 financial crisis, there's been a lot of ire directed toward the leaders of major Wall Street investment banks. And for obvious reasons, too. Blankfein is one of two remaining bank CEOs from the crisis. The other, JPMorgan's CEO Jamie Dimon, is also a billionaire when you factor in his ownership of JPMorgan's shares.
Goldman Sachs CEO Lloyd Blankfein is trying to sell his Sagaponack, New York, estate again — with a 20% markup on its listing in 2012, The Real Deal's Claire Moses reported.
Blankfein bought the property in 1995 and commissioned architect Larry Randolf and builders Men at Work to complete the mansion in 2001. The property has seven bedrooms, five full baths, a heated pool and tennis courts, according to the real-estate listing.
Meanwhile — as Blankfein tries to sell the property — take a look around.
Welcome to Lloyd Blankfein's summer home in the South Hamptons — priced at $17 million. Architects capped off the romantic estate with a barn-style roof.
Image may be NSFW. Clik here to view.
The front doors open into a simple foyer. Light streams in from floor-to-ceiling windows on nearly every wall.
Image may be NSFW. Clik here to view.
Take a seat in the summery, beige and cream-colored classic living room.
