Is Goldman Sachs racist
Wall street : Brutal power struggle at Goldman Sachs
If one has a black belt as a karate fighter and the other works as a DJ at night, who wins? The more brutal, of course. And his name is David Solomon. At night he enthuses the dance floor scene in New York under the stage name DJ D-Sol, during the day he is a tough negotiator who smashes or merges companies.
Winner Solomon is considered gruff, gruff, rude, and angry - a superior concept, at least in this case. But apparently he can also win over customers, convince them that he lends them a lot of money and helps them with takeovers.
David Solomon is now the only candidate to succeed Lloyd Blankfein as head of Goldman Sachs. His competitor Harvey Schwartz has now thrown in the towel.
Solomon and Schwartz, both bright, bald heads, 56 and 54 years old, had previously run the day-to-day business together. The two have recently been sent by the bank into a kind of “bloody cage fight,” as the Financial Times describes. Bank boss Lloyd Blankfein had announced last year that he wanted to stay for another two years so that the two competitors can show what they can do. He observed carefully who did it better, who brought the higher profits and who could rally the mighty in the house. Finally, he recommended Solomon as his successor, whereupon Schwartz announced his resignation for April.
The legendary traders had made super profits
The recommendation was not a matter of course, after all, the inferior Schwartz came from the same trading unit as Blankfein. The legendary traders, who trade in raw materials, among other things, but also in government bonds and currencies (FICC), had once brought unspeakable profits to the bank, but they had declined in recent years. In 2017, this unit's profit dropped to $ 5.3 billion. In 2016 it was 7.6 billion. In particular, bets on petrol that went wrong are said to have brought significant losses, reports the Financial Times.
In contrast, investment banking under David Solomon, who managed to increase income from his business by 70 percent within ten years and double the share of Goldman's total profit, has grown. The 2017 profit was 7.4 billion, the second highest ever in this unit.
Fought like a lion
Nobody has to feel sorry for the defeated Harvey Schwartz. If you have a black belt in karate, you won't be knocked over easily. And whoever was number two at Goldman and survived that can still be number one at a normal big bank.
Still boss Lloyd Blankfein, whose earlier departure was first reported in the "Wall Street Journal", likes to go fishing in peace. That is his hobby. He occasionally posts Twitter messages and it's about how nice and relaxed it is on Lake George when he's alone in the boat in the evening sun and has cast out the fishing rod.
Blankfein deserves the rest. He once fought like a lion himself. It was thanks to him that Goldman made incredible profits during the financial crisis, back when the markets collapsed.
Lloyd Blankfein had said something remarkable about investing a few years ago. "The only thing I know is that nobody knows anything. We are prepared when the markets go up and we are prepared when the markets go down."
You can read an explanatory article by the author on how investors can use so-called rebalancing to protect themselves from crashes here.
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