In the early 1990s, J Aron’s business was merged with Goldman’s own fixed income business to create the current fixed income, currencies and commodities (FICC) division, of which Mr Blankfein was appointed head.
Today, FICC rules the roost at the firm: revenues have risen steadily from $2.86bn in 1999 to $5.59bn in 2003. To effect such a stellar growth, Mr Blankfein has beefed up sales and trading capabilities, and the firm buys and sells everything from electricity (of which it is fairly significant generator) to mortgages and oil.
Reportedly, in 2002 he made more than the chairman and CEO, Hank Paulson – $12.5m against Mr Paulson’s $9.5m.
A Harvard Law School graduate, Mr Blankfein is swift to spot opportunities and wastes no time in capitalising on them. Most observers believe that he is CEO-in-waiting to Mr Paulson, and if Goldman’s revenues continue to rely so heavily on FICC, then they will probably be proved right.
Risks: He is known to be aggressive in business and a risk taker, and some believe that this could eventually backfire on Goldman. Anecdotal evidence suggests that there is some unrest at the firm; as FICC generates a higher and higher proportion of overall revenues, the bankers who formed the old backbone of the firm – those from M&A and equity capital markets – are allegedly getting the brush-off from the new guys at the top.
Some say this shift was exposed to the outside world by the shock departures in 2003 of veteran M&A banker John Thornton and COO John Thain. Both had spent more than 20 years at Goldman and had been seen as heirs to Mr Paulson’s throne.
“There is little left of the traditional ‘partner’ mentality or the old Goldman camaraderie,” says one ex-Goldman banker. “Sales and trading is the mentality du jour, and Goldman is now more about making revenues for the firm rather than servicing client needs.”