Tell-all or tell-nothing? A polite account of high finance

HE WAS BROUGHT up in the projects of East New York, where your mugger could be your neighbour (once, his was). A bright child, he sent a moonshot application to Harvard; somehow they said yes. Then it was law school, a stint as a tax lawyer, a move to a scrappy commodities firm and, when that was bought by Goldman Sachs, a job with Wall Street royalty.

Lloyd Blankfein felt like an outsider, he writes in “Streetwise”, even as he shimmied up banking’s greasy pole. The chip on his shoulder has not fallen away. He has never felt at ease with the patricians of finance. (He still has to concentrate to say “rather”, not “rath-uh”.)

Mr Blankfein’s career coincided with a decades-long bull market, fuelled by globalisation and a tech revolution. He became the boss of Goldman just months before the global financial crisis erupted. He devotes much of his memoir to describing how he ran the firm in 2006-18. He took it back to the future, as a merchant bank à la John Pierpont Morgan’s: simultaneously advising, financing and investing, and trying to manage the conflicts of interest that inevitably arose. That called for decisiveness, but Mr Blankfein also learned from underlings. “Tell me what you should do,” he would say, “because then I’m going to tell you to do it.” It wasn’t always a joke.

How-I-ran-the-firm memoirs can be turgid, but Mr Blankfein has a light touch. He offers readers “Lloydisms”, as colleagues dubbed his quips, and the cheeky, often self-deprecating humour that was his trademark as CEO. Occasionally he would make “Lloydian slips” that got the firm into trouble, such as when he told a journalist Goldman was doing “God’s work”.

Those hoping for riveting stories from the bloody trenches of 2007-09 will be disappointed that Mr Blankfein offers little that is new. He has more to say about why Goldman came through the crisis relatively unscathed. Despite a reputation for rapaciousness, the firm discouraged a short-termist “eat what you kill” philosophy among traders, he argues. A Goldman mantra is “long-term greedy”.

Surely Goldman also benefited from its connections in Washington? It was known as “Government Sachs” because so many of its departing executives went into public service. Mr Blankfein roundly, and convincingly, rejects the notion that the bail-outs were designed to help Goldman. Instead he reflects on how admiration for the firm “curdled into hostility” as the crisis dragged on. Goldman became a favoured target of the Occupy Wall Street movement and the press—Rolling Stone memorably called it a “vampire squid”. Politicians “sometimes seemed unable to decide whether the banks were stupid for getting caught by the mortgage-credit bubble or too clever by half for trying to profit by causing it”, Mr Blankfein writes.

He is coy on other topics. Diversity initiatives, a big business trend, get just a few sentences. Global inequality, even fewer. Tariffs? Burdensome but sometimes unavoidable (steady now). Politics? CEOs are better off staying away. This lifelong Democrat’s only anecdote about Donald Trump recalls how gracious the future president was when Mr Blankfein called to say sorry after a Goldman trader had badmouthed the Trump Organisation.

Mr Blankfein is most interesting when musing about how the financial crisis helped create the world as it is now, with its polarisation, the rise of the hard right, rejection of institutions and loss of faith in globalisation. He is worried about new technologies. The next global financial meltdown is likely to be caused by a tech blow-up—perhaps a hacker or a fat finger—rather than lax lending. AI has “catastrophic potential” that could make a vampire squid look almost cute by comparison.

Wall Street’s critics have mostly turned to other targets. But today Goldman is much larger than it was pre-crisis, with its market capitalisation two and a half times higher. The firm, he argues, has “no parallel at any commercial organisation I know of”. Was he serious all along about doing God’s work? Cue that impish grin. ■