From the WSJ's Deal Journal:
Why fix something if you don’t think it is broken?
Goldman Sachs CEO Lloyd Blankfein reiterated Tuesday that he would keep his bank’s core strategy and culture intact.
But something is surely broken when Goldman’s stock is trading at $69 a share, down almost 50% since Warren Buffett put $5 billion into the bank in late September and down 71% from its 52-week high.
Blankfein may point to the credit crunch and some fourth-quarter write-downs as an explanation for the stock declines. But investors are focused on Goldman’s business model. In a world of shrinking leverage, it just doesn’t work.
Of course, Blankfein may hunker down–hoping that time and a bull market may prove otherwise. But Bear Stearns and Lehman Brothers have amply demonstrated the folly of that strategy.
So here is an approach for Blankfein to consider: quickly restructure Goldman’s compensation system–and show his investors that he understands the old model won’t fly anymore....MORE