From Overseas Press

Goldman Sachs' soul search-sincere or strategy?

Updated: 2010-04-30 09:34
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Contrary to popular belief, Goldman Sachs has a soul-and it is even spending time searching it.

In the closing hours of Goldman's marathon showdown with a Senate panel in Washington on Monday, Chief Executive Lloyd Blankfein shared that the Wall Street giant is in the midst of an internal cleansing in which a top executive is leading a business practices committee and "going over everything."

A day after the hearing, some were questioning whether the reflective side of Blankfein was a sincere revelation that foretold a settlement of Securities and Exchange Commission charges against the firm, or if it was just a strategy.

"There is not a thing that will arise here and elsewhere that won't be the subject of some big soul-search and some tightening up of standards," Blankfein testified during a particularly introspective moment late in the roughly 11-hour hearing in which a Senate panel grilled past and present Goldman executives about whether the firm put its own profits ahead of its clients' interests.

Goldman officials-still confronting imagery left behind by a Rolling Stone article last year that labeled the firm a "giant vampire squid wrapped around the face of humanity"-declined to elaborate on the firm's soul-search.

Former New York Governor Eliot Spitzer, no stranger to negative publicity himself, said Blankfein had a delicate balance to strike during the hearing.

"He didn't want an article that said there was no self reflection," Spitzer said at the Reuters Global Financial Regulation Summit in New York on Wednesday. "He didn't say we acted in a way that didn't comport with our ethical obligations."

Blankfein was quick to point out that the soul-searching was not part of a legal requirement or ordered by the SEC, but something that the firm was doing on its own. Although he added that "everything that's been the subject of criticism will be tightened up."


Despite Blankfein's inward look, Spitzer doubted that Goldman would seek a quick settlement with the SEC, which has accused the firm of fraud for failing to tell clients that the debt securities they were buying had input from hedge fund Paulson & Co, which stood to benefit if the securities lost value.

"To settle now is to wave the white flag," Spitzer said. "That would do real harm to the brand of the firm."

Blankfein, who left one of his trademark voicemail messages for the firm's employees late Tuesday night, did not appear to be backing down.

"The questioning during the hearing was rigorous, but we tried to remain focused on providing a complete context of our business, how we manage our risk, and the value we provide for our clients and to the broader system," Blankfein said.

He said Goldman took seriously the ethical concerns raised during the hearings, but he steered clear of admitting the firm had done anything wrong.

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