Goldman enters rehab

By Felix Salmon
May 3, 2010
Mihaela Lica was writing about Goldman Sachs hiring “Master of Disaster” Mark Fabiani last Tuesday, with the news that he had helped prep Lloyd Blankfein and Fabrice Tourre for their Congressional grillings. Maybe that's why those two came out of the hearings better than most of the other Goldman executives who testified.

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Mihaela Lica was writing about Goldman Sachs hiring “Master of Disaster” Mark Fabiani last Tuesday, with the news that he had helped prep Lloyd Blankfein and Fabrice Tourre for their Congressional grillings. Maybe that’s why those two came out of the hearings better than most of the other Goldman executives who testified.

But it wasn’t until this weekend, when Blankfein sat down for in-depth interviews with Fareed Zakaria and Charlie Rose, that the media in general, and the FT in particular, woke up to the new strategy and the man behind it — especially since Blankfein himself admitted that his strategy had failed:

“We’re very important but the public doesn’t see that,” said Mr. Blankfein, who said the firm has always dealt with institutional clients and so it’s remained a little aloof from the American public. Now that the S.E.C. is accusing it of fraud, that’s going to change.

“It’s a huge challenge. I have to say, it’s my deficiency. But how often have you seen me on television–on general interest news shows?” he asked.

“Never,” said Mr. Rose.

“You know something, that was a probably a mistake. But now you see that we have a lot of work to do explaining to people what it is that we do. And we’re starting from a hole,” he said.

Blankfein probably needs to work on his own presentation, but in principle this is surely a good idea: the days when Goldman’s PR could be left to the famously-supercilious Lucas van Praag are over. Blankfein is the chief communicator at Goldman, for good or ill: that’s simply not something which can be outsourced.

Goldman’s PR operation has been on the back foot ever since Matt Taibbi’s “vampire squid” article came out in June. It’s tried a couple of hires: Samuel Robinson, chief of staff to president Gary Cohn, joined the PR team last fall, and now Fabiani’s taking the Goldman shilling as well. Maybe Goldman’s most expensive spokesman (at $500 million a year in prefered-stock coupon payments) will prove to have been a little bit more effective.

But the fact is that arrogance and secrecy are in Goldman’s institutional bloodstream, and that this particular crisis can’t easily be managed away. Blankfein’s going to have to get used to bad press — and to that bad press applying serious downward pressure to his share price. It will be years, if ever, before Goldman is rehabilitated.

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