Goldman chief eats humble pie with pledge of ethical review

Lloyd Blankfein to set up standards committee after bank is accused of fraud but rejects calls to quit

Goldman Sachs will become "self-critical" and "introspective", and re-evaluate the way it does business, the investment bank's chief executive told its annual meeting.

In a humbled performance designed for consumption far beyond the audience of loyal shareholders, Lloyd Blankfein said recent weeks had been "difficult and disappointing" for the firm, which faces civil fraud charges over its mortgage business and has taken political heat on Capitol Hill.

"There is no bigger priority for our board and management than to undertake a comprehensive review of all our business practices," he said, announcing that a "business standards committee" will be set up by the board to report on possible changes. "The effort will be defined by one central question: are the clients of Goldman Sachs and the broader public interest served in a manner entirely consistent with their highest expectations?"

The committee will examine ways to improve ethics at the firm, and make sure clients are not short-changed when conflicts of interest arise, but Mr Blankfein did not elaborate on how soon any modifications will be made to what he insisted were already high business standards.

Mr Blankfein faced down a call for him to resign by one vocal shareholder. Evelyn Y Davis, a veteran shareholder activist, said only a change at the top could restore Goldman's reputation. "A once great company is going to pieces," she said. "The only way out of this is for you unfortunately to step down by the end of the business day on Monday." The chief executive responded: "I have no current plan to step down on Monday."

Shareholders gathered at Goldman's offices in Manhattan yesterday morning at a time when the bank's profitability has never been higher, but the public odour in which it is held has also never been fiercer.

The Rev Jesse Jackson also attended the meeting, to appeal to Mr Blankfein's "own values and background" to examine the impact of Goldman on the wider economy. Mr Blankfein grew up on a New York housing estate, the son of a postal worker, before becoming a gold trader and working his way up to the most powerful position on Wall Street.

"The problem is not fixing the blame" for the credit crisis, Mr Jackson said, and he poured scorn on regulators as well as on the actions of banks. But he said: "Wall Street is rising, citizens are sinking, schools are closing, there are record-breaking home foreclosures, poverty expanding, unemployment rising. There must be some pathway to the roots. The roots are dry and getting dryer."

Mr Blankfein said: "There is no future, no success for Goldman Sachs, unless the economy as a whole grows, and grows in a way that doesn't create a wide divergence. Who could be so deaf not to realise our success is related to the fairness of the economic system raising the fortunes of everybody."

A small number of protesters had gathered outside the meeting with banners demanding "Transparency now" and "Stop hiding the money", but they were fewer than expected, and outnumbered by police and security guards. Inside, shareholders queued up to urge the firm to be more green, more diverse and more open about the exact amount of money it pays its top traders.