Goldman CEO Lloyd Blankfein says he has no plans to step down, but with falling share prices and persistent public image issues, some are sizing up the guy who's currently #2 at the firm.  That's President Gary Cohn, who's also the firm's COO and the only other company executive on the Board of Directors.

While Mr. Cohn seems the natural choice to move up one notch and succeed Lloyd Blankfein as CEO, he isn't necessarily the first choice among current and former colleagues.  Their reasoning goes like this:  the same qualities that propelled Cohn to the number 2 spot within Goldman may also hinder him from reaching the top - his abrasive style, love of risk and strong relationship with Blankfein.  Blankfein and Cohn are said to have ingrained a culture of commerciality at Goldman as they pushed the company into a risk-taking era.

Former employees said that Blankfein and Cohn treated companies as both clients and competitors during their rise through Goldman's fixed-income, currencies and commodities unit.  Thus, if potential clients weren't interesting in working directly with Goldman, the firm found ways to compete against them. 

Former Bear Stearns CEO Richard Marin had this to say:  Cohn's arrogance is “the root of the problem.  When you become arrogant, in a trading sense, you begin to think that everybody’s a counterparty, not a customer, not a client.  And as a counterparty, you’re allowed to rip their face off.”

Gary Cohn became co-head of Goldman's ...  global securities businesses in 2003.  Within a year, the firm's pretax profit from trading and principal investments jumped 44% to $5.04 billion.  Goldman's risk increased in lockstep, largely at the behest of Cohn.  Its average daily value at risk - VaR, the measure of how much could be lost in a single day - hit $92 million in 2006 and broke company records for 6 consecutive quarters, until it reached $184 million in 2008.

Neither Blankfein nor the Goldman Board have said anything publicly about the next CEO.  Aside from Gary Cohn, other candidates might include J. Michael Evans, who oversees Goldman's business in growth markets and Asia, and Michael Sherwood, co-CEO of Goldman Sachs International.  Goldman has never picked a chairman or CEO from outside the company in its 142-year history. 

For further details, go to:   [Bloomberg, 7/24/11]