Lloyd Blankfein Has Got To Go!
Why has Goldman Sachs not relieved Lloyd Blankfein of his post as CEO of the struggling investment bank? It was revealed today that the Manhattan District Attorney has delivered a subpoena to the firm relating to its activity in the mortgage-backed securities market during the financial crisis. The subpoena comes on the heels of a report from the Senate's Permanent Subcommittee on Investigations, which said that Goldman "misled investors and created conflicts of interest as the company built short positions before the U.S. housing market collapsed."
The report appears to suggest that Lloyd Blankfein perjured himself during his testimony in front of the Subcommittee by insisting that his firm did not have a large short position in the mortgage market leading up to the crisis. Unfortunately for Mr. Blankfein, this is untrue, and is in conflict with numerous other accounts of Goldman Sachs' positioning in the mortgage market prior to the collapse. As a result, Senator Carl Levin, the chair of the Subcommittee has said that he would refer Blankfein's testimony to the Justice Department for "possible perjury charges."
This has to be the curtain call for Blankfein at Goldman Sachs. He should have been gone a long time ago, and at this point, shareholders should demand his ouster. It is bizarre that Goldman's board of directors has allowed Blankfein to keep his job as long as he has. The CEO is inextricably linked to the tarnished image of GS in the wake of the financial crisis. He also has been rightly called out for being tone deaf and completely out of touch with the rest of the country in the wake of the mortgage collapse, and subsequent recession. For example, Mr. Blankfein once told a reporter that he was doing "God's work" in his role as CEO of the investment bank.
When are shareholders going to get tired of seeing Blankfein's face on the television hemming and hawing in front of Congressional Committees? First there was the Abacus CDO debacle, where Goldman had to pay a $500 million fine for misleading clients in the mortgage backed securities market, after being charged with fraud by the SEC. Now, the CEO of Goldman Sachs is being investigated for perjury, of all things. This is terrible for the image of the firm. Enough is enough. Even if people inside Goldman feel as if the firm and Blankfein are being unfairly targeted, at some point you just have to confront reality and try to deal with the problem. The best way to do that would be to put a new face on Goldman Sachs and cut ties with Blankfein.
Blankfein is synonymous with the financial crisis and the perception of Goldman Sachs as a major purveyor of greed, corruption, and cronyism on Wall Street and in Washington D.C. Even if he was a tremendous CEO (which is questionable), he should have been sacrificed after the Wall Street bailouts and subsequent disclosures relating to Goldman's role in the entire mess, on principal alone. Keeping Blankfein on board has exacerbated a terrible image problem for the firm, which may culminate in perjury charges against the CEO. Shareholders have been raked over the coals, as well. Goldman stock has fallen off a cliff in 2011, losing more than 20% despite a relatively strong market environment. Somebody needs to be held responsible for the serious problems that have dogged Goldman Sachs ever since the financial crisis. That person, by way of his position as CEO, is Lloyd Blankfein.
It seems, however, that the firm has resisted making changes out of an ingrained culture of arrogance which clearly extends to the board of directors. Instead of acknowledging mistakes and attempting to rebuild public trust and acceptance, Goldman has steadfastly, and smugly, refused to own up to even the most trivial accusations of wrongdoing. This defiant attitude has cost shareholders a lot of money, and may have permanently damaged the Goldman brand. It is time that this charade stop - and the first step in that direction is dismissing Mr. Blankfein.
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