A Wall Street Mystery: Where Was Goldman's CEO?

Goldman Sachs CEO Lloyd Blankfein testifies before a Senate investigative committee on Capitol Hill in Washington, DC, April 27, 2010.
Jim Watson | AFP | Getty Images
Goldman Sachs CEO Lloyd Blankfein testifies before a Senate investigative committee on Capitol Hill in Washington, DC, April 27, 2010.

Some of the most powerful people on Wall Street passed through the offices of the law firm Davis Polk & Wardell yesterday. JPMorgan Chase’s Jamie Dimon was seen pacing around the lobby. Bank of America’s Brian Moynihan was there. Morgan Stanley’s James Gorman made an appearance. But...

Notably absent: Goldman Sachs’s Lloyd Blankfein.

The CEOs had gathered to pitch their firms to AIG and the United States government, hoping to score a role in what might be one of the largest stock sales ever—the proposed $20 billion secondary offering of AIG stock.

It will be a fee bonanza for the banks that get a role in the offering. Even though the banks are expected to cut their rates in half to win a place in the deal, they will likely take in $150 million.

But, in large part, this deal is about prestige. Every major investment banking group wants to be able to say it played a leading role in the largest stock sale in history. And that’s why they sent their big guns.

Except for Goldman. Blankfein did not make an appearance at Davis Polk. And his absence was noted.

Around town last night, people were speculating why Blankfein was a no-show. Goldman Sachs helped fuel this speculation by refusing to comment.

One theory, articulated first by Courtney Comstock at Business Insider, holds that Goldman’s history with AIG forced the firm to shy away. Goldman Sachs was one of AIG’s biggest trading partners in the very trades that brought AIG to its knees in 2008. As a result, Goldman became one of the biggest beneficiaries of the US government’s bailout of AIG. Comstock argued that Goldman had “gracefully bowed out of the competition because it didn’t want to look bad again.”

Many found this explanation unpersuasive. After all, Goldman aggressively sought—and won—a top role in the IPO of AIG’s AIA unit. If Goldman was shy about doing business with AIG, it would have stayed out of that messy deal.

Goldman did send Gary Cohn, the president and chief operating officer, to the meeting. Cohn is a close personal friend of Blankfein, and a likely successor to the CEO spot. So it’s not exactly like Goldman avoided the meeting altogether.

But still the mystery remains: why did Lloyd avoid?

Companies mentioned in this post


Goldman Sachs

Bank of America

Morgan Stanley



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