It’s tough out there for Goldman Sachs

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Ethan Wu (0:36)

Thank Pushkin, Goldman Sachs CEO, David Solomon, he's not likable. He's a tough guy with a very short fuse.

He dehumanizes you when he talks to you. This is the scurrilous gossip that has appeared in a recent, quite brutal New York magazine piece on Goldman Sachs' CEO. And it's not the only one. Solomon's been having a pretty bad time in the press recently. But today on the show, we gotta ask, is it fair?

This is Unhedged, the Markets and Finance show from the Financial Times and Pushkin. I am reporter Ethan Wu here in the New York studio in a very quiet Financial Times office, joined today by Rob Armstrong from sunny Long Island.

Rob Armstrong (1:18)

Actually, Ethan, I'm coming to you from a janitorial closet at the Goldman Sachs office.

Ethan Wu (1:25)

Ah, okay.

Rob Armstrong (1:26)

Where I'm listening for tittle-tattle to confirm the reporting that we've seen so much of recently.

Ethan Wu (1:32)

Listeners, the Financial Times will go to no end to get you the deep scoops in this industry, including infiltrating the closets of Goldman Sachs. So Rob, we're talking about David Solomon today and the really horrible time he's had recently.

Rob Armstrong (1:46)

It's not just New York Magazine.

Ethan Wu (1:47)

It's not just New York Magazine.

Rob Armstrong (1:49)

There has been rough coverage in the Wall Street Journal.

Our own reporters led by our colleague Josh Franklin have reported that people are leaving. Important executives are heading for the exits at Goldman Sachs. So it's been a tough season in print for David Solomon overall.

Ethan Wu (2:07)

Yes, it absolutely has been. And in the Unhedged newsletter recently, Rob, you wrote a bit of a contrarian take that, hey, maybe Solomon's being scapegoated here. Maybe it's not as bad as it would seem from the headlines. But before we get into that, I think we need to just kind of talk big picture about what we're talking about when we talk about Goldman. What do we think of when we think of Goldman Sachs?

And to me, its reputation before and during and after the financial crisis was this kind of like impenetrable fortress of Scrooge McDuck swimming through piles of gold coins, right? These elite cabal of bankers that always knew how to time the market. People will know the vampire squid quote about Goldman. But that's not totally true in the year 2023

After the financial crisis, there were all these regulations. Goldman has been a publicly traded business since 1999 And in some ways, the banking business is not the hot sexy thing it was in 2007, 2006

Rob Armstrong (3:03)

I think that's right. I mean, some point before the financial crisis, the image, the powerful image of Scrooge McDuck backstroking through a pool of gold coins might have been true. There was the famous economist piece that sort of called the top on that image in 2006 It was called something like Goldman Sachs on top of the world.

And the idea was these are the people who are leading financial capitalism globally. They are in the flow of information. They're making the right calls. They are influencing the big deals and et cetera, et cetera. And a lot has changed since then.

Goldman Sachs people will tell you that actually Goldman would have been fine in the financial crisis. It didn't really need a government bailout. Others disagree. But the point is because of the financial crisis, Goldman Sachs became a bank holding company and was caught in the net of post-crisis financial regulation.

Ethan Wu (4:12)

Yeah.

Rob Armstrong (4:13)

And it became a less dynamic, more highly scrutinized business. You know, that's been a huge change for them.

Ethan Wu (4:20)

So that's Goldman's reputation.

But we should talk about why it's had such a bad time in the press recently. And, you know, I think you can break that down into a couple of different categories, one being people don't like Solomon as a dude. They think he's got an abrasive personality. But there's a couple other issues at hand, Rob. And maybe you could talk through those.

Rob Armstrong (4:39)

So the main operational criticism of Solomon is that he put a lot of muscle and money behind Goldman Sachs' attempt to build a consumer banking franchise. And that attempt failed very badly.