Published On: Fri, Sep 14th, 2018

Goldman’s Leadership Is Firmly With Its Bankers Now

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For two decades, bankers and traders generally traded the reins of Goldman Sachs back and forth.

But the firm’s chief-executive-in-waiting, David M. Solomon, who started as a leveraged finance banker, has named two other bankers to top positions — a sign of where the strength of the financial powerhouse currently lies.

Perhaps alone among Wall Street firms, Goldman has tended to switch the top job from a banker to a trader. Just take a look at Mr. Solomon’s predecessors since 1990:

• Lloyd C. Blankfein (trader)

• Henry M. Paulson Jr. (banker)

• Mr. Paulson (banker) and Jon S. Corzine (trader)

• Mr. Corzine (trader)

• Stephen Friedman (banker)

• Mr. Friedman (banker) and Robert Rubin (trader)

The moves tended to reflect the shifting balance of power between the two businesses that long dominated Goldman’s operations. Mr. Paulson, for instance, ascended to the top spot in the late 1990s at a time when revenue from merger and acquisitions and initial public offerings was rising. When Mr. Blankfein took the reins, Goldman’s top line was ballooning thanks to trading.

But even then the balance between the two power centers was often reflected in the executives immediately below C.E.O. In the early part of his tenure as chief, Mr. Blankfein had Gary D. Cohn, a fellow trader, and Jon Winkelried, a banker, as deputies. And Mr. Paulson’s longtime deputies were John L. Thornton, a banker, and John A. Thain, a trader.

From 2009 through last year, however, Goldman was led by Mr. Blankfein and Mr. Cohn, a sign of the strength of the firm’s then-vaunted trading unit. Its last two chief financial officers, Harvey M. Schwartz and then R. Martin Chavez, also came from the trading desk.

But in recent years, Goldman’s trading business had stumbled and lagged behind its Wall Street rivals.

Mr. Solomon’s elevation of John E. Waldron as president and Stephen M. Scherr as chief financial officer — both of whom began their careers in investment banking — signals the ascendancy of Goldman’s banking arm within the firm.

With Goldman trying to shed risk by further emphasizing its mergers advice and consumer banking operations, it’s understandable that those businesses would take front and center in the firm’s management as well.

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