Goldman Sachs, whose alumni filled a number of Trump administration posts, named its former investment banking head to succeed Lloyd Blankfein, the chief executive officer who led the firm through the financial crisis and was blamed for some of Wall Street’s excesses.
David Solomon will move into the top job on Oct. 1 and take a seat on the New York-based lender’s board. Blankfein will continue as chairman until the end of the year and take the title of senior chairman after his retirement.
Solomon “has been a teriffic partner to me, and I look forward to watching him lead Goldman Sachs for years to come,” Blankfein said in a note to employees obtained by the Washington Examiner. “I am very optimistic that our firm has tremendous opportunities ahead and will continue to earn its distinctive position.”
Solomon was promoted to co-chief operating officer along with then-Chief Financial Officer Harvey Schwartz in late 2016, when Gary Cohn agreed to become an economic adviser to then-President-Elect Donald Trump.
Cohn, who had been viewed as a potential successor to Blankfein, left the Trump administration early this year when Trump, to the dismay of Wall Street, began imposing a string of tariffs on U.S. allies and competitors.
Other firm alumni who have left Trump administration posts during the president’s first two years include Dina Powell, a deputy national security adviser, and Steve Bannon, Trump’s chief strategist. Anthony Scaramucci, who served briefly as communications director, was dismissed in July 2017, and Steve Mnuchin remains in the role of Treasury Secretary.
The 56-year-old Solomon, who joined Goldman in 1999, headed the investment banking division for 10 years that included the financial crisis. He serves on the boards of Hamilton College and the Robin Hood Foundation, a New York City charity formed to combat poverty.
“I am honored and humbled to have the opportunity to lead Goldman Sachs, and I appreciate the confidence Lloyd and the board of directors have placed in me,” Solomon said in a statement. “I am excited about the opportunities for growth and know how vital our culture of client service and teamwork is to our success.”
Giving Blankfein the title of senior chairman rather than executive chairman after retirement allows Solomon more latitude to “bring his own style” into the C-suite, said Kenneth Leon, an analyst with CFRA Research.
The new CEO’s background and skill sets give him an advantage with some corporate customers, Leon said, as Goldman carries out its three-year plan to boost revenue by $5 billion. The initiative includes expanding total lending by $2 billion, in part through the new Marcus consumer-loan program, and adding $1 billion in investment management.
Solomon’s promotion was announced as the firm reported second-quarter earnings that topped Wall Street’s expectations. Profit of $5.98 a share compared with the $4.65 average estimate from analysts surveyed by FactSet, as net income surged 44 percent to $2.35 billion.
Revenue from its stock-trading businesses climbed 41 percent to $1.75 billion as Goldman joined Wall Street firms like JPMorgan Chase and Bank of America in benefiting from market volatility fueled by President Trump’s protectionist trade policies.
Major stock indexes have pulled back from January highs as the White House imposed double-digit tariffs on metals imports, threatened levies on as much as $450 billion in Chinese goods and considered duties on both cars and car parts.
Goldman fell 0.2 percent to $231.02 in morning trading in New York, widening this year’s losses to 9.3 percent.
Blankfein, a Harvard Law graduate who once worked as a commodities trader, was named chief executive officer in June 2006 when his predecessor, Henry Paulson, agreed to serve as then-President George W. Bush’s treasury secretary.
“Lloyd has been a remarkable leader during an extraordinary period of challenge for Goldman Sachs,” said Adebayo Ogunlesi, the board’s lead independent director. “His temperament and innovative thinking, deep understanding of risk and the firm’s businesses, and ability to motivate and inspire the people of Goldman Sachs have defined his tenure.”
Blankfein converted the firm to a bank holding company during the September 2008 financial crisis, a move that enabled it to access the Federal Reserve’s so-called discount window, which provides loans to firms with strained liquidity.
Leading the firm through the lingering economic downturn afterward and winning a $5 billion investment from billionaire Warren Buffett, Blankfein also grappled with numerous challenges.
“Keeping his courage and cool during the financial crisis and getting Goldman Sachs back on strong footing, I think that’s what he’ll be remembered for,” Leon said.
In late 2009, as high bonuses following government bailouts made banks a target of public ire amid widespread unemployment, Blankfein found himself in the headlines when he quipped to a reporter that he was just a banker doing “God’s work.”
The next year, the CEO negotiated a record $550 million settlement with the Securities and Exchange Commission over claims the firm misled investors in a high-risk mortgage product before the crisis.
“It’s always been hard for me to imagine leaving,” Blankfein told employees on Tuesday. “When times are tougher, you can’t leave. And, when times are better, you don’t want to leave. Today, I don’t want to retire from Goldman Sachs, but by my own perhaps convoluted logic, it feels like the right time.”
