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Goldman's Blankfein: 'We Haven't Gotten Everything Right'

April 26, 2012
In his first interview in 2 years, Goldman Sachs CEO Lloyd Blankfein told CNBC Wednesday, "We haven't gotten everything right in how we deal with the public." The bombshell op-ed piece in the NYTimes caught Blankfein off-guard, he told Squawk on the Street. The Op-Ed piece, which appeared in the 3/14 issue of the NYTimes, was written by the now-infamous Greg Smith, head of Goldman's U.S. equity derivatives business in Europe, the Middle East and Africa.  Mr. Smith said the firm put its own profits ahead of clients, with some executives disparaging some clients as "muppets." Mr. Blankfein responded by saying that Smith's assertions "do not reflect our values, our culture and how the vast majority of people at Goldman Sachs think about the firm and the work it does on behalf of our clients." Mr. Blankfein further told CNBC, "We’ve gotten used to surprises and knew we’d have to grapple with this...  As the day went on we got tremendous response. I have to deal with clients and people at work and the reaction was overwhelmingly positive and supportive." He added that Goldman Sachs "couldn't have the clients we have if we were anti-client." Chairman and CEO Roles. On the issue of retaining the combined role of Chairman and CEO, Blankfein defended the decision, although he praised Goldman's board for being diverse and "quite, quite knowledgeable."  "Externally there is one voice for the firm, which I will tell you is a good thing, not a bad thing," Blankfein said, "but internally there’s lots of responsibility and accountability by independent directors." He said that "of course" there is a succession plan in place but, like Warren Buffett at Berkshire Hathaway , Blankfein's successor "doesn't specifically know" who he or she is. "We have a lot of terrific senior executives," he added. He doesn't plan on stepping down anytime soon, however, noting:  "My plan is, this is a terrific job, it’s interesting, you get to be in a lot of different industries... I get to hang around with some of the smartest people, and deal with great clients around significant problems that have a lot of consequence for the world." Investment banking "absolutely it’s a growth business" around the world, Blankfein said.  "There are businesses and markets that didn’t exist. My predecessors didn’t go to China three or four times a year like I do, or India three times a year like I do. It just wasn’t an opportunity," he said. "If you think of what an investment bank does, which is advise people on their growth plans, finance those plans, manage assets for them, these were not places where wealth was being created or where companies were being formed. The world has gotten much bigger for investment banking." However, not so much in Europe or in the U.S. Like Jim O'Neill, head of Goldman's asset management unit, Blankfein said the U.S. "is slower than people thought we would have been at this point, is obviously in a growth mode but at a lower trajectory." Blankfein steered clear of endorsing a presidential candidate, saying he's a registered Democrat and a Rockefeller Republican with an email inbox stuffed with invitations to fundraisers for both sides.  [CNBC, 4/25/12] To access the tape of CNBC's complete interview with Lloyd Blankfein - on which this story is based - go to C-I News Link for Thursday, 4/26/12.