LAME-DUCK periods can last for only so long. It was clear beforehand that a Goldman Sachs earnings call this week would be packed with questions about succession. When would the chief executive, Lloyd Blankfein, step down? (He had said in March he was leaving, but gave no date.) What would his departure mean for the firm’s other over-achievers? Several had already decamped, including Harvey Schwartz, the bank’s co-president and co-chief operating officer. Left as heir-apparent was the man he had shared both jobs with, David Solomon, but with no hint of when his elevation would take place.
On July 17th Goldman ended the speculation by confirming the choice of Mr Solomon as CEO and saying that he would take over in October, earlier than predicted. Quarterly results presented that day by Martin Chavez, the chief financial officer, who is thought to be in his own succession battle to replace Mr Solomon, beat forecasts. Still, the share price sagged. Analysts cited fears about whether low figures for compensation, and profits from investments and lending, could be sustained. Investors may also have been left wondering what the new management line-up means for Goldman. Bucking the practice among big banks to have their bosses on the line during earnings announcements, neither Mr Solomon nor Mr Blankfein found time to make their way to the phone. Mike Mayo, an analyst at Wells Fargo, voiced a common reaction in a report entitled “Why no new CEO on the call?”
The awkward announcement was an appropriate coda to the Blankfein era. He became chief executive of what was widely regarded as the pre-eminent financial firm in 2006, months after Jamie Dimon was appointed to the top job at JPMorgan Chase, which then looked less steady. Mr Dimon has since steered his firm to a position of strength; by contrast, Goldman has too often seemed close to faltering.
Though Goldman did well during the financial crisis, that sometimes seemed attributable not to skill alone but also to timely interventions by a government that included former Goldman employees. The firm’s political connections and machinations—whether real or merely imagined—earned it the sobriquet “vampire squid” from Rolling Stone magazine. That tickled not only the Occupy Wall Street crowd, but the Wall Street crowd. Many of Goldman’s competitors adopted it with glee.
The post-crisis era was not as controversial for Goldman, but it was not as successful either. Its share price has lagged behind those of Morgan Stanley, Bank of America, and JPMorgan Chase in the past five years. Part of the blame lay with the declining profitability of fixed-income trading, the once-lucrative, somewhat mysterious operation that had propelled Mr Blankfein to the top job. Investment banking prospered; and in 2016 Goldman started an innovative digital retail bank, Marcus. But in other respects the firm was slow to adapt to changing circumstances.
That fed persistent rumours that Mr Blankfein was on his way out. But results were never truly dire and his humorous, self-effacing style won him fans, not only among employees but among clients and in government. A wistful note sent out after the announcement to employees was hardly an enthusiastic take on retirement. “Today, I don’t want to retire from Goldman Sachs, but by my own perhaps convoluted logic, it feels like the right time.”
His successor came to Goldman the long way round. Early stops included three major financial firms: Irving Trust, Drexel Burnham Lambert and Bear Stearns. None still exists. Irving was bought in 1988 and the other two went bankrupt—each no doubt leaving its scars. At Goldman Mr Solomon has moved up through investment banking, not as a polished salesman but as a tough manager. He is expected to centralise authority that has been dispersed among a large management committee.
Much is being made of the new man’s hobby: spinning discs under the stage name, DJ D-Sol. This is taken by some to suggest that he is interesting, young at heart and perhaps even cool, none of which remotely matters. But it may represent something important: a boss who likes people to dance to his tune.