Blankfein Defends 'GovSachs'; Stumpf Cashes In

American Banker, March 20, 2017 | Go to article overview

Blankfein Defends 'GovSachs'; Stumpf Cashes In


Byline: George Yacik

Receiving Wide Coverage ...

Double-edged sword: With so many of its former employees manning posts in the Trump administration, Goldman Sachs would appear to have a "unique and influential edge," the New York Times writes. And certainly the company's stock -- as well as that of other banks, to be sure -- has benefited from Trump's election. "Yet the Trump connection may actually be more of a liability, people close to the firm contend." One reason: "The constant scrutiny a company naturally falls under when five of its former executives are named to prominent government positions."

But Goldman CEO Lloyd Blankfein says his former colleagues now in government service "bend over backward to avoid any perception of favoritism." In his annual letter to shareholders, Blankfein defended the many prominent alumni who have held senior positions in the government, both past and present. Speaking of Gary Cohn, Goldman's former president and now Trump's National Economic Director, Blankfein wrote: "Gary was not the first person from Goldman Sachs to join the government, and we hope and expect that he will not be the last. Five of my most recent predecessors went into government service, and that has not been by happenstance."

Here's a list of the major Goldman personnel who have served in the past four administrations.

As part of his disposition of assets to eliminate potential conflicts in his new role, Cohn is selling about $16 million of stock he owns in Industrial and Commercial Bank of China, the world's biggest bank by assets. Outside of his shares in Goldman, the Chinese bank shares appear to be his largest holding, according to the Times.

Wall Street Journal

Easier to merge: The Federal Reserve may be making it easier for smaller banks to merge. Buried in a document that approved the merger of People's United and Suffolk Bancorp, the Fed said it eschewed doing the traditional full analysis of whether the combined bank -- with about $40 billion in assets and 400 branches -- would have posed a threat to the stability of the U.S. financial system. "Experience has shown that proposals involving an acquisition of less than $10 billion in assets, or that result in a firm with less than $100 billion in total assets, are generally not likely to create institutions that pose systemic risks," the Fed said. …

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