Goldman CEO Lloyd Blankfein Prepares To Step Down By Year End

Goldman Sachs Group (GS) CEO Lloyd Blankfein is reportedly gearing up to depart by the end of the year, leaving the company’s two co-presidents as likely next candidates for the position. Blankfein, 63, became the company's CEO in 2006 and has had a long, eventful journey as the firm's helmsman. He survived calls for him to step down during the financial crisis of 2007 to 2009; he overcame a cancer diagnosis three years ago; and, after announcing chemotherapy had cured the lymphoma, had said he was in no rush to leave the position. The 12-year run at the helm of Goldman has made Blankfein one of Wall Street’s longest-serving CEOs. (See also: Lloyd Blankfein: Success Story.)

The big bank is looking at co-presidents Harvey Schwartz and David Solomon as replacements, and it is not likely to look beyond them, according to a report from the Wall Street Journal citing “people familiar with the matter.” Some suspect Blankfein may time his departure to coincide with the firm’s 150th anniversary in 2019.

Blankfein and Goldman Shares

Goldman shares took a sharp dive earlier in today’s session after the news came out, but then quickly recovered. In late day trade, the stock was up 1.4 percent. During Blankfein’s tenure, shares of Goldman have increased more than 84 percent, second only to JP Morgan (JPM) among its peers and moving far ahead of the likes of Morgan Stanley (MS), Bank of America (BAC) and Wells Fargo (WFC) .

Source: FactSet

The Financial Crisis

As the head of one of the largest banks in the U.S., Blankfein had a prominent role in the financial crisis because he defended the firm’s use of mortgage-backed securities. These instruments that were once thought to be less risky included subprime mortgages, which defaulted in droves at the time and contributed to the overall economy’s collapse.

Goldman Sachs drew fire for betting against subprime mortgage-backed securities while not informing its clients of its position. Blankfein, in testimony before Congress, said that the bank had no moral obligation to inform clients on the matter.

A noted supporter of Democrats, Blankfein has been vocal on numerous political issues over the years, including issues outside of the financial services realm. For example, last year, he railed against President Donald Trump’s withdrawal from the Paris Accord. He has spoken out in favor of gay marriage and has served as a spokesperson for the LGBT civil rights advocacy group the Human Rights Campaign.  

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