Goldman could use independent chairman right now

May 4, 2010

Goldman Sachs could use a non-executive chairman right now. Four years ago, the investment bank decided against separating the roles of chairman and chief executive and gave both to Lloyd Blankfein. But now, as Goldman and its boss find themselves in the crosshairs of legislators, regulators and the public, that looks like a lost opportunity. It’s not too late, though, to make the change.

Not that putting Mr. Blankfein in charge was a mistake. Under his leadership Goldman earned record profits and avoided the missteps that brought down Bear Stearns and Lehman Brothers, and nearly ruined others. Of course, some of the ways Goldman did this are now the source of a Securities and Exchange Commission lawsuit.

The trouble is the qualities that make an excellent manager of a global securities firm do not necessarily work as effectively in the fishbowl of global public opinion. Mr. Blankfein has a good nose for money and talent. And in private he’s funny and surprisingly self-effacing for the leader of Wall Street’s richest firm.

But these attributes may be of little service in handling politicians who have little inclination to understand the nuances of banker compensation or taxpayers who couldn’t give a whit about details of synthetic capital markets. Meantime, Mr. Blankfein’s sense of humor (“doing God’s work”) has come across as glib rather than thoughtful.

A non-executive chairman could ideally provide some air cover for the chief executive. A statesmanlike figure, with strong political and diplomatic skills, would also help deflect some of the glare that has been laser-focused on Mr. Blankfein. At the very least that would allow him more time to run the company.

Such has been the experience at Citigroup, whose chief executive Vikram Pandit struggled with his own public persona a year ago. Naming politically-savvy Richard Parsons as chairman has clearly helped take the heat off Mr. Pandit.

There are other good arguments to separate the chairman and CEO roles. That’s why so many companies are doing so, including Goldman rivals Bank of America and Morgan Stanley. True, making a change now might give the impression that Goldman’s board had lost faith in its chief. But with the pressure increasing on the firm, it could also be the best way to keep Mr. Blankfein where he belongs – running Goldman Sachs.

Comments

chairman buffett?

Posted by theinfamoushw6 | Report as abusive
 

43 percent of revenues to the employees of Goldman Sachs? Think of how much better your investment in GS would be doing over time if they took only 10% for compensation.

Posted by breezinthru | Report as abusive
 

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