Lloyd Blankfein on Trump the 'Foxy' Trader and How to Reset America - OZY | A Modern Media Company

Lloyd Blankfein on Trump the 'Foxy' Trader and How to Reset America

Lloyd Blankfein on Trump the 'Foxy' Trader and How to Reset America

By Nick Fouriezos

WHY YOU SHOULD CARE

The Goldman Sachs legend weighs in on whether it's time to throw out everything and start from scratch.

By Nick Fouriezos

Former Goldman Sachs CEO Lloyd Blankfein sat for a revealing interview with OZY’s CEO and co-founder on the latest episode of The Carlos Watson Show. The following are some of the best cuts from the full conversation, which you can find on the show’s podcast feed.

On Trump supporters attacking the U.S. Capitol

Lloyd Blankfein: Let me start by incorporating by reference about how horrible it was and shocking and bewildering, and so I don’t think I have anything to add to all the expressions. I’m trying to get to how did it happen and what did we learn and what do we do from it? In my life and especially in my job, you’ll understand, we had moments where things would go wrong and you had to sort things out. And we were so big and so involved in so many things around the world, nothing could go wrong anywhere without somehow affecting us in some way. And anytime we had a problem or an incident and worked through it, I always try to say, “Let’s not try to get back to where we were. Let’s try to be better from this. What did we learn from this? How is this going to improve us?”

I think something else I learned that’s analogous to some of my experience at my old job: We would have people who were very effective at the narrow purpose of their job. We had traders that had big P&Ls. We had bankers who are very, very clever and very, very good with their own clients. But in some cases, we’d have those people … [who were] very, very good, but they were incomplete people. Maybe they were bad people. Maybe they were low characters. Maybe they were a little [too] clever. And maybe when you asked a question, they didn’t give you a complete answer. Maybe they were a little bit nontransparent when you needed transparency. And along the way, you kind of know that. But it’d be easy to be seduced by the high P&Ls and the high performance.

And for somebody who is a leader of that kind of group, you rationalize, you kind of say, “The guy has given me what I want. The guy is really good. The guy is really, really, really good and productive,” and overlook those bad character and things sometimes. I learned over time that character overrides everything, that you have to have the discipline to give up somebody who is otherwise high-performing, someone who makes a lot of money for you, someone who also does very good at his job, if you don’t trust the guy or if he’s a low character or they can’t get along with their colleagues or they might come close to the line of cheating in some way, even though you hadn’t found it yet but you worry about it because that bad character will always come out and will come out at the worst time.

The bad trader who kind of is a little bit foxy, guess what, he’ll break your heart and disappoint you and maybe behave badly at a war, at the worst time. Or run afoul of some regulator and involve you in something bad at the worst time. So you have to have the discipline. Why am I giving you that long story? Because I think for a lot of people in this country, Trump delivered what they wanted, even though they wouldn’t want their children to grow up and be like that. I can’t speak for religious people in this country, but everyone knows that Trump did not live a highly moralistic lifestyle, and all the evidence that we have, and yet he was delivering the kinds of programs and policies and legislation that people in those categories wanted.

So I think they overcame that and that maybe they said to themselves, “Look, he’s the instrumentality while he himself is not living a pious life, he is the instrumentality of getting good done, so I will vote for him.” Maybe a lot of rich people who want to avoid paying taxes liked his tax policy. Maybe people like myself who likes strong economic growth policies like the fact that he was getting rid of some regulation that was really not accomplishing its stated goal but was impeding progress, and like that. And that kind of overrode people’s knowledge of what the character was, but that came out at the worst possible time. And I’m not referring to the events of yesterday at the Capitol. I’m referring to the way he dealt with or didn’t deal with COVID.

On the need to reset America

LB: I’m not trying to sound like my wife who wants to redecorate everything, throw out everything and start from scratch and I just want to put a new tablecloth.

Carlos Watson: [interrupts] I’m with Laura, I’m with Laura, I’m with Laura. Let’s go big.

LB: … and throw everything that I’ve already paid for right into the trash.

I think we need to make some adjustments. Look, the fact that we’re so struck by this and everything, it’s terrible. I don’t agree with people talking about it was a coup. It was couplike. Did I really think that the government was threatened in any way? Remember the movie Seven Days in May? Did I really think that they were … no. I think institutions held and the backlash was seen to some extent, but not everywhere, not in enough place does, but we still get a lot of legislators not going that way. I think we have to make some adjustments. I don’t think we have to radically change the face of America. We did have our elections. I think we have to make some adjustments. I’m not throwing the baby out with the bathwater. And America has a lot of capacity to adapt, and we have adapted.

On the cultural resonance of Goldman Sachs

CW: I want to go back to Goldman where I once worked for you, which now feels like long ago. Why do you think Goldman is so well-known? It’s funny, today when I look at Goldman’s market cap of about $100 billion or so, is that right? And we’re now living in an era of the trillion-dollar companies, whether it’s Apple or Amazon or others or Tesla, or what have you.

LB: It’s like turning up Park Avenue and it’s like driving a Park Avenue in New York, [but] you can’t even find Grand Central Station. It once loomed over everything, but now it’s surrounded by skyscrapers.

Goldman again has businesses that are largely focused on high strategy and very focused on very important, biggest. … We advise the biggest companies. We do capital markets transactions, the biggest transactions. We cover the highest net worth people. We deal with sovereigns. Historically, Goldman’s the No. 1 firm and big M&A No. 1 firm, usually on cap equity issuances. So all the activity in the core of Goldman doesn’t have a lot of big processing businesses. Doesn’t have a lot of factory floors. Doesn’t have a lot of people moving inventories around. Goldman is very, very concentrated in high-profile, big, significant strategic activities with people that are highly leveraged and leverage-able. There’s not a lot of people warranted to do that.

Goldman has expanded, but with the same total kind of people. But I think the notoriety comes from the nature of the job that gets done. The quality of the people that gets hired for those jobs. And although Goldman is the smallest of the big firms by tens of thousands of people, I think Goldman has had three or four treasury secretaries. Just in the recent time, [Steven] Mnuchin was a long-term Goldman guy. And so is Hank Paulson, obviously. So was Bob Rubin. My last five predecessors were in the government. And by the way, that’s true in other countries as well, and also Goldman Sachs tends to be involved in things that have serious consequences and outgrowths — the mergers, the nature of the economic activity that Goldman Sachs drives.

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