The Credit Crunch Genius Who Masterminded a [Pounds Sterling]2 Billion Jackpot; (1)New York Powerhouse the Goldman Sachs Building in Manhatten Where David Viniar Is Based (2) Market Guru: Goldman Sachs Chief Financial Officer David Vinair,who Was the Architect of the Bank's Bold Moves

The Evening Standard (London, England), December 18, 2007 | Go to article overview

The Credit Crunch Genius Who Masterminded a [Pounds Sterling]2 Billion Jackpot; (1)New York Powerhouse the Goldman Sachs Building in Manhatten Where David Viniar Is Based (2) Market Guru: Goldman Sachs Chief Financial Officer David Vinair,who Was the Architect of the Bank's Bold Moves


Byline: CHRIS BLACKHURST

AT GOLDMAN SACHS, in public, they don't want to be seen to be gloating.Richard Gnodde, the cohead of Goldman Sachs International, is asked what thebank should have done differently in 2007? He replies: "If we had taken earliersteps to avoid the turmoil that engulfed the credit markets, we could haveleaned against the loosening of credit in a more aggressive way. The speed ofthe correction when it came surprised us." Not much triumphalism there. Youwouldn't know from this remark that Goldman turned what could have been adisaster into a sensational profit.

While other banks were losing billions on defaulting home loans in the US,Goldman was racking up a [pounds sterling]2 billion jackpot. This year, as other banks havebeen forced to write down huge losses, fire their senior staff and generallyput themselves through hell (Northern Rock almost went under completely), forGoldman, 2007 was another record.

Today, it will report best ever annual net profits of more than [pounds sterling]4.5 billion.

That's after staff have shared a [pounds sterling]9 billion bonus pool (an average of [pounds sterling]300,000for each of the 30,000 employees).

For the 400 or so who enjoy partner status in Goldman, the rewards are muchhigher. And for a few who run the bank, such as Gnodde, the payout is enormous(along with Michael Sherwood, the other London boss, he is thought to haveshared [pounds sterling]50 million).

Yet Gnodde is saying the organisation could have done better. It's very muchpart of the bank's ethos not to be seen to be crowing. In private, the sense isof self-congratulation, of delight that Goldman stole a march on the rest. "Avictory for risk" is how one very senior Goldman banker put it, his facewreathed in smiles.

All credit, he said, to the genius of David Viniar. Within Goldman, four namesare being mentioned in connection with the subprime coup.

Of those four, Viniar, 51, is by far the most senior. Known as "Bones" for hislanky frame, he is a native New Yorker, from the Bronx, who played basketballin his youth before going to Harvard and joining Goldman. For the past eightyears, he has been its chief financial officer.

On Wall Street, Viniar is a legend for his unflappable demeanour and forusually calling the market correctly. In 1994, he steadied nerves in the bankwhen rising interest rates were playing havoc. He later saw off the Russiandebt crisis and the collapse of Long-Term Capital Management in 1998. He alsoweathered the dotcom fallout.

He was a partner at the time of Goldman's flotation in 1999 and received sharesrunning into tens of millions..

Last year, his basic pay was [pounds sterling]300,000 but his bonus and other executivecompensation schemes took his total earnings to more than [pounds sterling]16 million.

When his old school wanted a new athletic centre, he donated [pounds sterling]1.6 million.

He's regarded as deliberately neutral in an institution that can befactionalised and extremely political. He doesn't take sides or allowpersonalities to cloud his view. He's been described as the "omni- Renaissancebanker", someone who "wouldn't care if it were from his best friend or hisenemy. The religion at Goldman is commercial success".

While other CFOs have been and gone at Goldman's competitors, and while withinGoldman itself there have been changes at the very top, Viniar has stayed,resolute and firm. One Goldman partner said: "He is totally trusted.

He's at the centre of any significant capital commitment. He would neverapprove every trade we do but he has control over any of the big investments,any big acquisition or loan, and he'll know whether to let it go through. Hehas the credibility to do so.

"Sometimes, chief financial officers are conservative and then they'reoverridden by others. That doesn't happen to him." A year ago, Viniar sat downwith Dan Sparks, 40, and other senior managers, to discuss the bank's growingexposure to the possibility of the market turning south. …

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