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Lloyd Blankfein
August 2, 2013
by J.A. Young

 

The 2008 financial crisis appears to have drifted into memory over the past year. Plunging stock prices and usurious housing loans no longer dot the tickers below our leading news anchors.  It seems as though the once palpable outrage, worry, frustration, and contempt for the inadequacies of global capitalism have largely subsided from the public sphere.  Then again, what exactly was the response that we witnessed to the crisis?  We saw some protests to be sure, a few big names in the papers, and Washington bailouts that were presumably designed to solve the problem.  But this generalized view of events doesn’t tell us much about what exactly has happened to solve the problems that caused our global economic catastrophe.  Who was directly responsible for this calamity, and what has happened to them?  If we take a critical glimpse at the man who runs one of the biggest banks in the world, we see the real issues behind the financial straw man that characterizes global economics.  Nothing much has changed, and one of the biggest reasons is because people like Lloyd Blankfein are still in power.

 

 

Since the beginning of the crisis, around 8,000 Americans have been arrested for protesting the failures of Wall Street and Big Banks. [1] Curiously, nowhere near as many C.E.O.’s have found themselves behind bars.  When I say nowhere near as many, I mean almost none. [1] Bernie Madoff may have been the poster boy for white-collar crime at the start of the meltdown, but since then there have been little to no legal penalties for the affluent business magnates that are primarily responsible for widespread problems in our financial system.  One of these people is Lloyd Blankfein, who has occupied his post as C.E.O. at Goldman Sachs (GS) since 2006.

 

 

In many ways the now dapper New York C.E.O. represents what many people consider the American dream. Working his way up from meager beginnings at the Linden Houses in Brooklyn, Blankfein matriculated to Harvard by way of Thomas Jefferson High School. [2]  With the beneficial tutelage of some of the best economic theorists in the world, Blankfein was able to develop his economic prowess as an undergraduate on his way to receiving a law degree (also from Harvard) in 1978.  From that point on he developed a sound reputation for himself as a corporate tax lawyer, and eventually worked his way up to the head post of Goldman Sachs.  Blankfein’s unlikely rise from humble origins has endeared him to many in the business sector, but the unscrupulous nature of his ethics has also made him a target of widespread criticism.

 

 

 

Preceding the financial crisis Blankfein ushered in a new era of growth for GS. In 2006 and 2007 the company posted phenomenal profits, and healthy growth for shareholders.  This corresponded to bonuses for Blankfein of $53 and $68 million respectively.  But while stocks soared and massive bonuses were doled out, GS was slowly falling into financial distress.  Following the collapse of the housing market in 2008, the bank found itself in dire straights, and required a massive government bailout to avoid bankruptcy. [3]  Like so many other large financial firms, GS was deemed “too big to fail” by the suits in Washington, and received emergency funding to the tune of $10 billion. [4] So what exactly was done to fix the problems that created this financial catastrophe?  Surely you cannot simply throw money at the problem and wish it away.  In short that is exactly what was done, and once again Lloyd Blankfein continues to pursue reckless business opportunities at the expense of others.  Following his bailout from the United States government, Blankfein moved to outsource nearly 1,000 GS jobs to Singapore. [4]

 

 

Here at Can the Man we have previously noted that GS is, like so many banks, a company that has a history that is largely devoid of integrity.  In a previous Man profile, Loren Mayshark covered Hank “The Hammer” Paulson, who was Blankfein’s predecessor as head of GS.  Paulson developed a ruthless business model for the company during his years as C.E.O. that included the use of political conspiracy and financial manipulation to boost profits.  This helped to grow the bank into the investment hegemon that it is today, but it also left a dangerous legacy of unethical tactics. Unfortunately for us, nothing has changed since the cutthroat days of the Hammer, despite what Mr. Blankfein would have you believe.  In recent years GS has cultivated what some have called a “revolving door” relationship with the U.S. government.  This means that when executives and higher-ups at the company are done with their time in the private sector, they can be quietly ushered into positions in Washington and vice versa.  With this a system of cronyism in place, we can see a clear possibility for conflicts of interest.  One of the main reasons that Lloyd Blankfein and GS have been able to get away with their economically flawed business model is because so many ex-employees now make decisions in Washington.  Big Business and Big Government have once again become one and the same.

 

 

In an article released in 2012 simply titled “Why I am Leaving Goldman Sachs”, Greg Smith chronicles his many years of service spent working at the company.  The crux of the piece concerns the change in character that the bank has undergone during Blankfein’s tenure as C.E.O.  While the company has never been a model of irreproachable business, it has recently taken a sharp turn towards a solely underhanded ideology of economics. Smith notes that during his career with GS, Blankfein was the primary cause of a “decline in the firm’s moral fiber”. [5]  He also states that the company now functions based upon the callous notion that nothing supersedes the importance of making money. [5]  In the world of Lloyd Blankfein, everything is acceptable with the exclusion of monetary losses. Stockholders, employees, and average citizens are ants under the boot of The Man and Big Banking.


The most recent evidence of Lloyd Blankfein’s tyrannical business practices concerns GS’s massive stockpile of aluminum.  At nearly 25% our national supply, the bank controls a massive amount of one of the world’s most widely used manufacturing resources. [6]  Aluminum is put into everything from cars to cans, and GS has recently used its supply horde to unethically manipulate the global marketplace for the metal.  Specifically what the bank has focused on is the “treatment of physical commodities as purely financial assets to be manipulated for trading and investment purposes, rather than inputs for the real economy.” [6]  This in turn causes real world consequences for businesses that require aluminum in order to continue operating.  If you run a company that needs aluminum, you could be in serious trouble simply because Blankfein sees an opportunity to make a buck.  Isn’t this the kind of manipulation that had such serious consequences just a few years ago?  How can the government have given this company 10 billion dollars in capital so that they can continue kicking dirt in the face of the rest of the world?  One thing that I can tell you for sure is that when Wall Street came crashing down, Lloyd Blankfein had an insurance policy.  He had people in the right places to make sure that come hell or high interest rates, his company would continue on as it always has.

 

When asked about his position as C.E.O., Blankfein told an interviewer that he is simply “Doing God’s Work.” [3]  Perhaps he was misquoted.  It would have been more appropriate for him to say, “I am God.”  It is a corrosive problem that people in the upper echelon of business view themselves above the rest of everyone else, and above the rules.  These bankers consider themselves the saviors of free market capitalism, but they have created a system where the only thing that is privatized is their own wealth. [7] The losses of the system are distributed evenly between customers and citizens while those at the top ring of the ladder stockpile profits. [7]  If you went into the street to protest this blatantly corrupt system there is a good chance that you now have a black mark on your police record.  On the other hand if you are Lloyd Blankfein, things are only getting better.  A ten billion dollar bailout for actively perpetuating economic amorality?  That sounds like business as usual to me.

 



1.) Jilani, Zaid. “No Arrests on Wall Street, But Over 7,700 Americans Have Been Arrested Protesting Big Banks”. http://thecontributor.com/no-arrests-wall-street-over-7700-americans-have-been-arrested-protesting-big-banks.  Accesed 28 July 2013.

2.) Cohan, William. Where Blankfein came from”. http://management.fortune.cnn.com/2011/04/21/where-blankfein-came-from/. Accessed 28 July 2013.

3.) Carney, John.  Lloyd Blankfein Says He Is Doing "God's Work" http://www.businessinsider.com/lloyd-blankfein-says-he-is-doing-gods-work-2009-11#ixzz2apJ9PYUp. Accessed 30 July 2013.

4.) Keyes, Scott. “After Taking A $10 Billion Bailout, Goldman Sachs Announces It Will Outsource 1,000 Jobs To Singapore”. http://thinkprogress.org/economy/2011/06/28/255724/goldman-sachs-outsource-1000-jobs-singapore/. Accessed 25 July 2013. 

5.) Smith, Gregg. “Why I Am Leaving Goldman Sachs”. http://www.nytimes.com/2012/03/14/opinion/why-i-am-leaving-goldman-sachs.html?pagewanted=all&_r=1&.  Accessed 25 July 2013.

6.) Stanley, Marcus.  “The Goldman Sachs Guide to Manipulating Commodities”. http://www.usnews.com/opinion/blogs/economic-intelligence/2013/07/24/how-goldman-sachs-and-wall-street-manipulate-alumnimum-and-other-commodities.  Accessed 24 July 2013.

7.) Callen, Bryan.  “The Joe Rogan Experience: Podcast #376”.  Accessed 1 August 2013.

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