To his mind he might be "just a banker doing God's work", but in the popular imagination Lloyd Blankfein has become the devil incarnate.
The company he runs, Goldman Sachs, has come to epitomise everything wrong with Wall Street and investment banking generally. The Goldman chief executive has found himself in the uncomfortable position of lightning rod for much of the torrent of criticism aimed at "the firm".
Comments like Blankfein's quip in a newspaper interview that he was "doing God's work" have stoked the public fury that has engulfed the organisation. That's despite the fact that the line was not meant seriously. It was an off the cuff aside, made by a man whose humour usually serves as one of his saving graces.
Humour, of course, is one way the short, chubby, but clever kid can survive in a tough inner city school. And Blankfein certainly went to one of those. His rise to the top from humble origins is the sort of story Americans gush over, epitomising the concept of "the dream".
Lloyd Blankfein was born into a Jewish family of very modest circumstances in the South Bronx district of New York in September of 1954. When he was three, they moved to Brooklyn where his father took a job in the sorting office of the US postal service, after losing his job as a truck-driver. The younger Blankfein has described this as a clever move on Dad's part – such a job was all but impossible to lose. His mother was a receptionist for a company that sold burglar alarms, another solid position in the type of neighbourhood the Blankfeins called home.
Being raised in this environment, it is perhaps no surprise that Blankfein started working young. He got his first job at the age of 13, selling sodas at New York Yankees baseball games on commission. "I'd remember walking along and somebody in the upper part of the upper decks would raise his hands and say 'I'd like a soda'", he said in a TV interview. "And I'm thinking, this tray is unbelievably heavy, and the lids didn't work so well in the 1960s as they do today, and I'm going to walk all the way up there for two and three quarter cents? And guess what? I walked all the way up there for two and three quarter cents."
This work ethic and the willingness to do anything for a buck, or even a cent, were to serve him prodigiously well. Blankfein graduated from Thomas Jefferson High School as valedictorian – a title conferred in the US on the highest ranking student to graduate from an institution in any one year. This led him to Harvard, and then Harvard Law School, where his eye-popping fees were funded through the help of a combination of scholarships and government financial aid.
From there he joined an LA law firm, where he dealt with tax issues for the entrainment industry. However, overcoming the odds, as he did, did not immunise Blankfein from bad habits. The prince of "casino capitalism" used to indulge in a more prosaic form of gambling, driving out to Las Vegas with a friend to play Blackjack for relaxation. Goldman's PR people were, of course, horrified when this revelation emerged as Blankfein assumed the position of heir apparent to Hank Paulson, who was to become George Bush's Treasury Secretary.
He reached that position after what he has described as "pre-mid life crisis" that led him to see if he could break into investment banking. Initially rejected by Goldman's exhaustive selection process (it's not unusual for candidates to undergo 15 or more interviews to ensure they have the right "fit"), he got in through the back door, finding a role as a gold salesman with commodity trader J. Aron (his wife, also a corporate lawyer, cried when informed of the news). Aron was a rough and ready place, but had become one of Goldman's rare acquisitions the previous year. As a salesman, Blankfein was put in charge of traders, and made a success of it. He gained a lot of kudos by structuring a $100m bond for a Muslim client so that it complied with the prohibition Islam puts on earning money through interest.
And yet anecdotes from that time show he was aware of the firm's customer-centred approach, snatching a phone out of the hands of one trader who was preparing to yell at a client. In one interview he said he was "invisible for the first 24 of my 27 years here", before adding: "It's not like I asked for this." But getting to the top at an organisation like Goldman is not done easily. It requires sharp elbows and ruthless determination. So along the way, Blankfein also smartened up his act. Today he couldn't be further from the tubby, bearded, and sometimes rather dishevelled figure who nonetheless made such a big impression at Aron. While he's balding and has retained his slightly squeaky Brooklyn accent, he is now smartly dressed and trim. He sees himself as a communicator. He has eulogised in interviews over the firm's "flat" management structure and the encouragement staff are given to raise issues where something is "not right". He has a habit of leaving voice messages to staff: "It was up to about one a day during the crisis," he says.
Most recently, he used one to mount a defence of the firm and its decision to fight the fraud case brought against it by the Securities and Exchange Commission. After introducing himself ("this is Lloyd, in New York, on Sunday") he said: "The core of the SEC's case is the allegation that one employee misled two professional investors by failing to disclose the role of another market participant in a transaction. Importantly, we had assumed risk in the deal and we lost money, just like the other two long investors. I will repeat what you have heard me say many times in the past: Goldman Sachs has never condoned and would never condone inappropriate activity by any of our people."
His willingness to fight the watchdog shows another side of Blankfein's character. He is a different beast from his predecessor, Paulson, the urbane consensus builder who successfully made the transition into politics. The suits may have improved and the paunch may have been worked off, but there is still something of the street fighter about him. Another criticism that has been levelled at Blankfein is that he is only really comfortable with "his people" and has surrounded himself with a coterie of them from the now dominant trading side of the business, which has boomed as a result of people like Blankfein realising they could make more by using Goldman's own money to put its people's clever ideas into practice than clients would ever be prepared to pay.
Goldman knows that the firm has a public relations problem. The bank has done things like barring its staff from its lavishly appointed suite at the New York Yankees' palatial new stadium during the worst of the financial crisis. Blankfein, too, has taken a hit to his stupendous earnings. He took home an astonishing $68.5m in 2007, setting a record for a Wall Street CEO. That had been clipped to a more "modest" $9.8m by 2009. But such PR gestures have done little to assuage the firm's mounting army of critics. Perhaps that's because Blankfein doesn't acknowledge the business has rather wider issues to grapple with than just a poor public image.
He regularly repeats the firm's mantra that the client comes first, above everything. Critics say that what recent events have show is that what Goldman puts first, above everything, is Goldman, and the army of wannabe Blankfeins that work for it.
In fighting fraud charges levelled by the SEC, Blankfein, the man with a genius for analysing risk, has taken one of the biggest gambles of his life, violating what many financiers see as one of the unwritten golden rules of Wall Street: you don't take on the regulator. As one of them, from a rival firm, says: "Really they're in an impossible position; they lose if they fight and they lose if they don't. But if they do lose this case, Lloyd very probably will have to go."Reuse content