The real winner in Goldman’s management reshuffle

Lloyd Blankfein speaks onstage at the Fortune Most Powerful Women Summit 2016 at Ritz-Carlton Laguna Niguel on October 18, 2016

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Lloyd Blankfein

While Goldman this week underwent its most dramatic management reshuffling in a decade, Lloyd Blankfein remains firmly ensconced as chief executive – and appears likely to stay, having outlasted an impatient deputy and effectively restarted the clock on his new successors-in-waiting.

That means Goldman’s strategy isn’t likely to change much from the course set out in recent years: cautiously expanding into new areas while hawkishly defending its turf in the core businesses of trading and corporate banking. For all its changes since the crisis – a foray into retail banking and an embrace of technology – most of Goldman’s profits still come from core Wall Street activities.

The management changes were set off by the departure of No. 2 Gary Cohn, who is heading to the White House as a senior economic adviser. Chief financial officer Harvey Schwartz and senior investment banker David Solomon will jointly ascend to Cohn’s old seat of president and chief operating officer. R. Martin Chavez, Goldman’s chief technologist, will become CFO.

The shake-up is the biggest since Blankfein was elevated to chief executive in 2006, and will come as welcome news to executives lower down the ranks, who have grumbled about a bottleneck at the top.

But the changes have a familiar feel.

Blankfein has swapped one longtime comrade from the trading floor, Cohn, for another, Schwartz, and tapped a third as CFO. The executive suite at Goldman is still stocked with people who reported to Blankfein when he was a trading executive.

The rotation shows that he continues to keep trusted lieutenants close and reflects the board’s support for him, a decade into his tenure.

Since returning from an absence last year in which he battled lymphoma, Blankfein has made it clear around Goldman that he doesn’t plan to leave soon. As outgoing London senior executive Michael Sherwood said in a recent interview: Blankfein “doesn’t say one more year; he says five more years.”

That left little room for Cohn, who has spent much of his 26-year-career at Goldman as Blankfein’s right-hand man. Blankfein’s illness cast him as a substitute CEO of sorts – a role he took to, associates say. As it became clearer he was unlikely to ascend, Cohn began discussing leaving the bank earlier this year, according to people familiar with the matter.

When Blankfein filled his role, he continued a tradition of installing J. Aron alumni in key roles. This was Goldman’s commodities arm where Blankfein, got his start.

Schwartz began there as a salesman. Pablo Salame is also an alum. He is co-head of the securities division and was this week named a vice chairman of the firm, a select title reserved for those in Blankfein’s close orbit.

And even one seemingly unorthodox move this week fits the pattern. Schwartz’s job as CFO will go to Chavez, who becomes just the third finance chief in Goldman’s 17-and-a-half years as a public company.

A bearded, tattooed, gay, Latino techie, Chavez cuts against the stereotype of a Wall Street executive and is in some ways emblematic of a new, cooler Goldman. He left the firm in 1997, later founded and sold a tech startup, returned in 2005 and in 2013 was named chief information officer.

On his watch, the firm has embraced technology, launching web apps to automate banking and trading tasks and woo clients, and making software central to its foray into new businesses such as 401(k) retirement plans and personal savings accounts.

But even if he doesn’t come off as a traditional button-down banker – Chavez has said that during a stay at a New Mexico monastery he had a revelation that he should return to Goldman – he, too, represents the old guard at the bank. He got his start in J. Aron in the 1990s as a “strat,” building mathematical models for senior traders including Cohn.

What is jokingly called by executives “the J. Aron takeover of Goldman Sachs” also reflects the concentration of power by Blankfein, who is set to be the longest-serving CEO of Goldman since Sidney Weinberg held the position for more than three decades.

Write to Liz Hoffman at

This article was published by The Wall Street Journal

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