kid comes out of Hamilton College he's
rejected as a security analyst I believe
at Goldman finding you know everybody
get in line a lot of people are rejected
he builds a career in I'm going to call
it bonds leverage finance and such ends
up back over Goldman Sachs and climbs on
board what was Mr Solomon's first day at
Goldman Sachs like what was the real
back story that you've reported on well
fuzz dead Goldman Sachs back in 2000 was
probably filled with regret because it
was a few months off to the bank's IPO
so he wasn't one of their pre-ipo
Partners but in the last 20 years he's
clearly built an exceptional career at
the firm because now he's running
Goldman Sachs grouping which is
undoubtedly one of the four most Wall
Street powerhouses there when you think
about Investment Banking when you think
about trading when you think about a
bank that can communicate with
governments institutions hedge funds you
are thinking about Goldman Sachs
Solomon's challenge is to take that and
try and make it something more than that
in the last five years he's had mixed
results on that front in your wonderful
article today I'll put it on Twitter
folks really really a great summary
there you talked to a guy named Mayo who
I've known for years and I believe it's
Mike that says look this is a guy that
nailed it just as you said and he had
one course where he butchered it have
you ever butchered a course John sure
many times I have many times as the
operative word here how does he fix that
View tomorrow that's the important thing
in Mike mayo and it's not just any
banking analyst Mike Mayo is in some
ways the dean of Wall Street banking
analyst and when Mike Mayo says look on
a scale I can give you a plus for your
legacy businesses which let's
acknowledge is still 70 percent of their
business that is a good grade but then
he says he's had middling results on
many other fronts including an f grade
in the consumer banking operations and
the question he's asking is you have
failed the class and what's the
consequence of that and that's important
because the perception and the image you
have of a Goldman Sachs is a place that
does not tolerate average so when you
have a venture when you spend so much
time into saying you could build a new
platform that could become the leading
digital banking firm in the country and
then that gets unraveled that puts a lot
of pressure and even after the
reorganization they announced a few
months ago that has not satisfied the
partners inside the film that is not
satisfied investors and analysts so they
are still seeking answers so the
question is are all options still on the
table will they be forced to do another
radical revamp are we suggesting they're
tolerating average at the top of the
business
average rating overall yeah that's if
you listen to Mike Mayo that's where it
gets to he's given me a scale from a
plus all the way down to F so what is a
couple of B's and C is thrown in there
where does the other side come from
who's responsible to correct that
and Goldman Sachs it's interesting
unlike perhaps most other places some of
the oversight comes from people
reporting into Mr Solomon because even
if it's a public company it is still a
partnership and the partners still have
a reasonable amount of sway ordinarily
you will say the board but the board
does not tend to act and show up and
kick and create kick and scream when the
performance is average they are there
for crises they don't come and say well
your Stock's not great your stocks are
bad times up so Massachusetts Financial
Services owns 2.04 percent of the stock
and they've just learned it's a
partnership is that is that what I think
I heard okay can you tell us how much
tension is there between the
Partnerships
and Goldman CEO you can't really hide it
anymore it's pretty much spilled out in
the open there is clearly a lot of
grumbling some would even say a
semi-open revolt and they have tried to
raise questions and to be fair the top
of the house has recognized that David
Solomon John Walden recognized that
there is some dissatisfaction in the
ranks they will point to among other
things that these are people who are
unhappy with compensation in 2022 that
came off the ridiculous highs of 2021
that deal making business is not back
and people are still sitting around
twiddling their thumbs and will find for
reasons where they can point their
fingers and say that's not going well in
your great article Gorman book ratio 1.8
1.8 Solomon 1.1 1.2 whatever it is I
looked at operating income Peter emailed
in from Connecticut and said Tom look at
operating income let's look at operating
income right now Morgan Stanley 25 cents
in the dollar and I'm going to model the
challenges of Goldman Sachs a lot less
than that 17 cents on the dollar how do
they get the operating income ratio up
other than growthiness here's the
amazing fact here right if you look over
a time period of five years and if
Goldman Sachs were to make 400 billion
dollars
in Revenue let's say Morgan Stanley were
to make 350 billion dollars there is
still a good chance that Equity
investors would value that or because
it's much more predictable and they
could model it whereas Goldman Sachs has
perhaps made more money but that is to
their detriment as much as 2022 was bad
in some ways the fact that they did so
well in 2021 might also count against it
yeah I get there I mean I'm thinking of
Brad hints iconic at Sanford Bernstein
years ago everybody hung on his Black
Books if Bernstein wrote a black book on
Goldman Sachs right now can they develop
that persistency of cash flow of the
modern Global Wall Street ship and we
have this line in the story when you go
back to 1999 the Goldman Sachs IPO
prospectus talks about the need for
building stability and earnings they
talk about how asset management will
play a key role 25 years later we're
still talking about that that idea of
ballast has been around it's about
execution and let's be clear Goldman
Sachs has been trying to do that in the
last five years they've focused a lot of
effort into their Asset Management
business into building this alts
Juggernaut sort of a mini Black Stone
2010 when Morgan Stanley talked about
going deeper into wealth management and
building scale it's not like the equity
markets readily believe them it's not
like by 2015 James Gorman had a
re-rating on the Morgan Stanley stock
that took a while it didn't happen until
2018 1920 does David Solomon have that
Runway is the question does it matter
Solomon had a cameo in billions did
Gorman no are you saying it's a
personality issue by bringing that up
you and I have witnessed the Sid Davos I
mean yes it is
interpretation or guesstimate of
Personality I'm not saying it's the
heart of the matter yeah but that's the
unspokenness out there we're saying this
with great respect for everybody at
Golden well let's stress testing
difficulty guys for the counterfeiture I
know but let's go back to the original
race Lloyd blank fine at the top David
Solomon Harvey Schwartz how different
would it have been if the current color
CEO
with Harvey Schwartz taking that role is
it now in the coming months whenever
that might be how different would that
have been if it was him that got the nod
and not David Solomon it's it's it's
very hard to judge that way you would
have had Harvey Schwartz who came up
through the trading ranks and perhaps
five years later we would have been
talking about all the trade doesn't
happen it's your next story would Harvey
have done the bank like David did the
bank
that's a tough question uh um
I don't think you can give a fair answer
the reason I asked the Christmas tree is
because I think we often give these CEOs
too much credit when things go right try
too much what when things go wrong as
you've pointed out and you know and
you've said this in the last five
minutes they're super tankers they're
tremendously difficult to maneuver I'm
just wondering how much different things
would have been if leadership was
different but ultimately to Tom's point
the frustration with David Solomon that
comes up continuously through reporting
is not just the decisions but it's the
nature of the individual who's making
these decisions and perhaps the pandemic
was a great example of that when you see
all these stories that the CEO was
frustrated with bumping into people who
worked for Goldman in the Hamptons when
the question wasn't being asked why was
the CEO in the Hamptons is it about the
personality or the decisions fair point
but in his defense let me point out one
thing that the seat of the Goldman Sachs
CEO is one of the hardest jobs in
finance it has a lot of scrutiny and
everyone has personality quirks it just
appears larger and brighter in that seat
so did Harvey Schwartz have certain
personality quirks maybe maybe we'll
find out in the kernel I'll see your
role we would certainly have found out
if he had become the Goldman Sachse