"When Blankfein asked about his title, a boss at J. Aron said, 'You can call yourself contessa if you want.'"As much as anything the power-play will reveal if the traders still hold sway.
-Fortune, January, 2006
From Fortune via CNN Money:
A guide to the battle for control is playing out at the top of the Wall Street powerhouse that once dominated the financial world....MORE
Shakespearean is a trope often used to describe the machinations of Wall Street power players, but only the Bard could do justice to the treacheries reportedly playing out at the top of Goldman Sachs. The story leaking out of the bank has all the ingredients of a classic Roman play -- a powerful leader weakened by the battle of the financial crisis and a trusted friend who sees an opportunity to grab control. The firm itself is shrinking in the wake of Dodd-Frank legislation, a spate of partners left this year, and shares have lost about 25% since Blankfein became the CEO in 2006.
Goldman declined to comment, and company spokespeople have maintained for months that there's no real story to discuss until the firm announces a succession plan. Even so, all the world (well, the financial world) is watching 200 West Street. Here are the most interesting players to follow as the investment bank's fifth act unfolds.
Lloyd Blankfein, CEO and chairman of the board
When times were good at Goldman (GS), Blankfein's main concern was how to keep the investment bank growing. His self-deprecating sense of humor helped mask the ruthlessness that former partners say propelled him ever higher in the organization. Since the 1970s, the CEO role has often been shared between two people, but Blankfein has been in the top spot all alone and he has been saying that he has no plans to leave.
But recent reports say that a growing chorus of shareholders wants Blankfein to step aside. He was, after all, the boss pre-credit crisis; overseeing activities that were later called fraudulent by the SEC and investigated by the Senate. Questions about integrity under his leadership were raised again this spring when mid-level manager Greg Smith quit and wrote aNew York Times editorial that said the bank's main goal was to make money by duping clients. Blankfein fought with a powerful shareholder, the American Federation of State, County and Municipal Employees (AFSCME), to keep his job as chairman of the board. And he just took a 35% pay cut.
After two years of rumors about a possible departure, even some within the firm wonder whether he should go. Those critics may even include his long-time number two and close friend Gary Cohn.
Gary Cohn, president and chief operating officer
Cohn has been Blankfein's right hand man since he started working as a trader at Goldman in 1990. Over the years, the two became friends and confidantes, but the New York Post reports that the relationship between the two men has deteriorated. This comes as little surprise. While Blankfein was telling anyone who would listen that he wanted to stay atop the bank for another few years, a Goldman partner and a source close to the board told Fortune in February that Cohn had successfully jockeyed to become Blankfein's successor, and that the changeover could happen as early as this summer. The Wall Street Journal reported in March that the firm did indeed have a contingency plan in place that would make Cohn the CEO and Blankfein the chairman, should shareholders force the bank to shake up the C-suite. (A claim that Goldman denied.)
Other Wall Street CEOs have told Fortune that unless Cohn gets the top spot this year -- while there is no other obvious successor lined up -- they don't believe that he will ultimately get the job. There is a perception, true or not, that the two men are very similar leaders, and that their rough-and-tumble style has transformed a formerly client-centric culture for the worse. As Blankfein once told Fortune, "We didn't have the word 'client' or 'customer' at the old J. Aron [the metals trading division where he worked with Cohn for years]. We had counterparties - and that's because we didn't know how to spell the word 'adversary.'" Since both Blankfein and Cohn are believed to embody this attitude, making Cohn CEO may not satisfy shareholders who want real change at the top.
People have already begun to bet on how long Cohn will keep his job if Blankfein stays. That may greatly depend on whether Blankfein can work with a man who seemingly saw him at his weakest and made a grab for his job.
John Rogers, executive vice president, chief of staff and secretary to the board...
HT: peHUB
