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tv   Economic Club of NY - Goldman Sachs CEO Lloyd Blankfein  CSPAN  July 7, 2018 2:12am-3:07am EDT

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>> recently goldman sachs interview lloyd blankfein sat down for an interview at the economic club of new york. they talked about immigration trade policy, crypto currency and the future of wall street. >> and now on to main event. it is my great pleasure to introduce long-time good friend of mine, lloyd blankfein, chairman and chief executive officer of goldman sachs. he has served in this role since june of 2006 and as a director since 2003. previously he has been the firm's president and chief operating officer. prior to that he was vice chairman of goldman sachs with management responsibilities for fixed income, currency commodities division and the equities division.
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he has a long tenure with goldman sachs. if you include the company where lloyd worked, and they were acquired by goldman sachs. they were a commodity trading company acquired by goldman sachs, he has racked up about 36 years this fall of tenure. which you don't rather very often anymore. so for all of our millennial members, it has worked out for some of us to have long careers in the same company. before that he worked at the -l-leizure. donovan he worked for non-profit organizations, including the dean's advisory board at harvard law school, the dean's council at harvard university
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and advisory board of the university school of economics and management, and the board of overseers at the wild cornell medical college. he remains on the board of the partnership for new york city. recall the day when i took over for lloyd as co-chairman of the partnership for new york city. it was supposed to be my day. it was supposed to be like a big celebration for my day, and lloyd grabbed the microphone and says terry, congratulations. i just want you to know i hope your two or three years as chairman of this organization are better than mine because these are the worst freaking years of my life. [laughter] >> it happened to be following 2018 and 2019. i don't think he was related to the partnership of new york city, but his message was
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delivered loud and clear. i don't remember anything else about any praise or recognition for me about that day. it was all about lloyd. the format today is going to be a conversation, and we are delighted to have as our interviewer john micklethwait. john is the editor in chief of bloomberg news, and you have seen him before. he is a member of the economic club of new york. we are proud to have him as a member and add our interviewer today. i would like to invite both lloyd and john to begin that conversation. [applause] >> as i do, and as they approach, i would just like to remind everyone that this is program that will be on the record. we have quite a bit of media, electronic and print that will be covering it today. begin.
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lloyd: i don't think of myself as sounding the way you made me sound. john: he was complaining throughout the speech. we are going to work through the world economy and maybe talk about finance, the future of goldman and anything you want to interrupt about. should we begin with the main economic news? you saw this morning china promising to fire back against the trump tariffs. are we in a trade war? are we in a huge game of chicken? or is this just a side show from your point of view? lloyd: i will let you know. the problem is that how many times can you be on the edge of your seat waiting for the shoe to drop, it doesn't drop, and how many times can you get that anxious about it? i would say i don't know if this is going to be the pattern of north korea, a lot of bluster. i don't think we are in a suicide pact on this, so i suspect that we are not going
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to cause the economy to claps -- collapse with something on steroids. but i do think -- so i don't think that is what is going on. i do think, as some people have commented, that this is kind of a negotiating pattern. that is my best take. john: you went to china with trump, although months ago. were you disappointed with his china policy? lloyd: i met him in china. it was a trade mission. i have to say, let me give credit. it didn't occur to us to go on the trade mission. i got called up by the white house and said do you guys have a pending transaction that is near enough to close that we could close it as part of our trade mission to china. i just said no, we don't. i got a call back -- we have a lot of things going on in china. from them a back
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couple of weeks later, and they said remember what we asked you? it turns out yes, you do. the chinese said you do. we went there, and in fact, we losed an important transaction , which is kind of a joint venture between ours and a sovereign wealth fund of china to go out and each raise an amount of money, put it in our managed private equity fund and invest in u.s. businesses that will be able to export into china. this is an early effort, symbolic in the scheme of the level of u.s. trade, but an important symbol of what china wanted to do. john: back then china seemed to be looking outward. they were doing things like the deal with you. now suddenly they are retaliating at the moment. lloyd: the whole thing with china, there is a lot of
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frustration with china from here. china is very frustrated with the sudden aggressiveness of the u.s. policy. but anybody who has trance acted with china appreciates the potential of china, has had good experiences in china and frustrating experiences in china, and at various times one or the other comes to the fore. we ourselves, to be honest, 15 years ago almost, set up our joint venture in china that was to lead to us have our own investment bank in china, which seemed imminent at the time. there have been a lot of suggestions that that was going to happen very quickly, and in fact statements that said it is already available. and then oftentimes that gets announced at the senior-most level, and when it gets into the ministries that have to affect these things, we found out recently that now these many years later in order to
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own our own entity, it has to be capitalized at a level that would make it totally not sensible for us to do it. so we are back at square one. again, we are in finance, but we are advisors to people in other industries, and other industries have had similar experiences. again, this would not be the course i would have done, not necessarily recommend. but i could see what happens at times. a lot of the people who are is essing too publicly this a very difficult thing for americans, a very bad thing, which of course we know from taking economic courses that it s at the end of the day, and publicly making these statements. they have to pay homage to your clients and customers in china. at the same time, when they are not in public, could very well be going to the u.s. government and saying you know something? what you are doing may not be such a bad thing. so i can understand how we get to the place that we get to. john: did you see the argument that that was made acceptable,
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$50 million worth of tariffs of, but now you have $200 billion and it has gone beyond. lloyd: again, it is not my style. but if what you want to show is -- if you want to give somebody an incentive to see the world from your point of view, it doesn't help to remind them of your negotiating things if it is a better one. if we go tit for tat, by the time you get to a hundred, they run out of things to apply a tariff it to, and we don't. in if you want to make that point, you make that point. if you are crazy and really wanted to end free trade, that is what you would do if it was a negotiating things and you wanted to remind your negotiating counterparty of just how much firepower you had to bring to the negotiation,
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which one is it? john: do you think donald trump is a protectionist? he disliked nafta. lloyd: remember rosencrans? how could you play me? who am i to say weigh thinks. i don't know what he would do -- what i would do in his place, and i am not sure what he would do in his place. t if you ask me can i give a narrative about how this is a useful thing to do, i can't say as a lot of people do with respect to almost everything he does, this makes no sense at all. it does not make no sense to me at all. john: if you look around the world at the moment, you have what we have talked about. you've got the china situation, and you've got italy hell-bent on challenging the eurozone. you have brexit. you have argentina. you've got turkey. the possibility of a populist
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in mexico. you have all these things. and yet the markets just seem to shrug their shoulders. is political risk not really a factor now? lloyd: separate them. a lot of the risk in the world today -- or concentrations is a lot of risk in the world. but a big concentration of risk is sovereign risk. you can look at politics, but you can look at the economic situation. if you look at it, a lot of the leverage in the world that was with the banks didn't disappear from the world. they migrated over to the sovereign. so you see that the sovereign n the u.s., we have the $4.5 rillion balance sheet, euro, similar amounts, debt on sovereign balance sheets. the banks are deleveraged, but now the risks are with the
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sovereign. john: does any of those particular sovereigns worry you lloyd: well, for a variety of reasons. it has a huge amount of debt. the debt might be big for its partners. in 2011 when it was a sovereign debt crisis in southern europe, the issue was is there the willingness of the e.c.b., i.e., is there the willingness of germany to sort this out and to back it up, to back up this southern europe situation? now those lines never converged. sovereign debt of the southern european countries, especially italy, had continued to widen out. they were getting an sfwrate subsidy for being connectled to germany, but they didn't have to reduce their debt. now the question is not the willingness, but the capacity to do it. one thing about the u.s., we print the money we borrow in.
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japan prints the money they borrow in. here is a lot of risk to printing the money you borrow in. printing too much money is not going off a cliff. in europe, everybody borrows in a fournette currency. italy doesn't print euros. it is always more worrisome how one would deal with that, and there are rules that the countries in europe use to protect their fiscal policy. i would say that issue and immigration are the big risks to the whole construct. john: you see italy as the biggest sovereign threat? lloyd: well, it was in the news. it is because of its size. that was there for a while. but also because more recently, heir election of a more -- john: an unusual coalition?
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lloyd: well, getting more usual all the time. if you look at what happened in central europe, you might even say what happened in the united states. merkel in of mrs. germany. i don't want to merge these two things, but the financial risks of these two countries, and also the kind of immigration issue which creates some stress on the establishment governments, which feed into the financial crisis, and that creates the geo political risk that we face. john: what is happening to merkel at the moment, do you ee this wave of populism linked to -- >> lloyd: we are seeing it in united states on the southern border. horrible tragic situation, but it is an immigration issue that splits -- the immigration debate has split the country. more realistically in europe,
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and more dramatically and consequentially in the near term, the immigration issue in europe where magnanimously germany admitted a couple of million people. one would say the right thing. but hard cases made bad law. with open borders in europe. brexit is a direct link to what i think are the consequences to the immigration crisis. they are talking about a soft brexit. if you get into a soft brexit that people are now speaking of, the only thing that britain will have accomplished in brexit is the immigration matter. ou look at the populism in italy, and the relatively right wing movements in central europe, those are reactions to immigration questions. john: there is an interesting balance. on the one hand -- lloyd: don't get me wrong. hard cases made bad law. i wouldn't want to be in the
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position our government finds itself in with regard to the tragedy at the border. i couldn't do what is being done now. when you listen to the pundits, i don't hear anybody talking about the consequences, how long it would take for millions of people to appear on our southern border if we permitted it and permitted people to pass through. the same thank happened. you saw the tragedy and the consequence of what was happening along the mediterranean. again, you learn -- one of the cliches of law school. hard cases made bad law. when you want something, when it appeals to you and to your heart, and you make something work out as a matter of your sense of justice as opposed to a rational progression, you could end up with a hard case but bad law. john: do you think that politics is much harder than business? you have all these people from goldman who went into the white house. it was like the house of lords
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for ex-goldman employees. friends of yours did that. now they have come back. do you look at those sort of decisions which they make, people like merkel and trump, do you think that is much harder than the sort of decisions that business people have to make? lloyd: look, we can change our minds. some days i do things out of the public eye. some days i do things in the public eye. it is the consequences. punditry.ch the what we are watching now is heart-rendering. i wouldn't be on that side. thank god i am not there. in my role and certainly in government where you have to make these choices, it is never right against wrong, good against evil. the issues are always right against right. what do you want to do? both sides are right. you admit million of people into germany and what happens? the european construct that worked for 60 or 70 years,
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which arguably ended a the pattern of every generation warfare, that is put at risk. is that right to do? no. s it right to leave people and babies strewn on beaches? no. so what do you want to do? it is hard. it is easy to criticize and easy to say what you would do if you didn't have to bear the consequences whatever is decided. but when you have to bear the consequences and you realize there are adverse consequences on both sides, that is tough. i have an appreciation for the decision-making, and when something doesn't work out quite right, i don't want to kill the person making the decision. john: does that put you off of a later career in public life? lloyd: no, because i can't imagine being made to feel more
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miserable than i was outof public life. john: a fashion to run for mayor of new york city. lloyd: somebody put that out there and they said would you? i said no, i would be mayor of new york city, but i don't know if i would run for mayor of new york city. john: i will take that as a no. on the general impression, it is interesting. you seem relatively sanguine about the markets and the economy, but you have run through all these political risks. lloyd: i have a lot more. john: brexit, all the different hings, the trade wars. lloyd: how about swrates? john: how high do you think interest rates will go in this country? lloyd: how high can they go? when i got out of school, short term government interest rates were in the teens, and not the low teens. above way, inflation was
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10% and unemployment was above 10%. these things can happen. everybody is debating and lips of quivering is the fed going to raise three times this year or four times this year and next year? i remember -- in 1994 i remember the fed raising 50 basis points between meetings. so i don't think people are praised for what the potential is if the fed feels it gets beyond the curve and what would be the consequences of that. just think, every bond that has been bought since interest rates are low, everybody wants higher interest rates so you will have a higher return. but every instrument in anybody's portfolio would then drop in value. it will be worth less. think of all the assets in the world that are priced off of a discount model. how about real estate and almost everything else. you think what happened to the
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finances of the world and the economies of the world. you had a dramatic and in ected and rapid drop realize prices -- real estate prices, the rapid fall and rise of interest rates would have more causes. is this my base case? no. but i am in the business of risk management, and i am forced to spend about 9% of my time worrying about the 2% of the things that could go wrong. john: another strange thing about that is out of the many areas that people worry about, one is consumer -- lloyd: by the way, i am optimistic. [laughter] i am wallowing in the 2%. john: you just terrified everyone here. lloyd: i live in a state of terror, so that is all right. john: we will come back to that.
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consumer debt is one of the first things to get hit by higher interest rates. new york fed has said there is $13.2 trillion worth of consumer debt. yet that is the field that goldman is choosing to expand. you are trying to hit consumer debt, personal finance, that sort of area. does that make sense at this stage of the cycle? lloyd: well, we intend to be in business. i don't know how long this cycle lasts, and we intend to be good risk managers through all cycles. we are not going to get into businesses that are franchise businesss for a cycle. how we land on our protocols and profiles to what we feel the market is. but let me just stay as a predicate, the predicate in your question, is in a way we are going into the consumer business, but not so much that we are chasing a consumer business that is so foreign to
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us, which consumer business generally is foreign to goldman sachs, an institutional firm. but really what has happened as a result of movement in technology, the opportunity in the consumer space has moved to us. if you are lending to 500 people the kind of decision making you would make in consumer lending, it is like jimmy stewart in it is a wonderful life. you look into somebody's soul, a neighbor. i will lend you that much money, mrs. so-and-so. but if you are lending to 50 million people, it is math. it is algorithms. it is macro risk management, the stuff we are good at and have been good at for a very long time. if they are not your neighbors and coming to you online, then it is digital delivery and digital platforms, which we are kind of good at and have done for a long time.
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there is a big customer experience to this, and we have to import that into the firm, but a lot of the risk management decisions, the distributions decisions. the algorithms that go into making this kind of decision kind of is in our wheelhouse. one of the reasons that represents a big opportunity for us is we don't have legacy stores. we don't have thousands and thousands of branches that we have to protect on the one hand. and the normal disrupters in the space, the silicon valley crowd that would normally come into this space aren't licensed deposit takers and don't have balance sheets and really can't do it. hey we have to rig and securitized. it is rare that you get a big bank like ours that doesn't have a legacy risk that has to
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be protected. john: it is a mask. you deal with lots of big companies. sometimes you have to say no to them. in this particular case if things do go down, if things change, you get up to 20% of prime, it is going to be normal people in houses who you have to say look, we need the money back. this is going back to what you said earlier, and this is going to be a different political environment. >> what we are doing so far is unsecured lending. if they lose money and they don't want to pay us back, there is no house to repossess, no car to take over. so we made a poor decision. i won't feel happy if they don't pay us back. [laughter] hn: hang paulson came her -- lloyd: we are assuming that people care about their credit ratings and position, and they tend to pay back. we have to make the right macro risk decision.
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to make a judgment about one person or 500 people is a sketchy thing. it is easier to make a judgment on 50 million people. john: you see all the banks who had to go through the hell of 2018-2019, which you did in a very different way. but this particular one, if it does go bad again in consumer debt, this is something where people will use images which nay not be as helpful. lloyd: i will tell you, we will be the ones that will suffer. these are not mortgages on people's homes or secured lending. we will be the ones on tv that you will feel sorry for. [laughter] john: it is possible. [laughter] lloyd: we have other consumer verticals too, and there is more to be rolled out in this space. but it looks very attractive. again, it is the migration of the opportunity, not us trying to be what we otherwise would be in 10 years had we chased this business 10 years ago.
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john: hank hall son came to this room and said you should expect a financial crisis every eight years. lloyd: me personally? john: no. he has probably told you that already. do you feel as if there is another financial crisis in the works? you said consumer debt you are happy with. sovereign dealt you are worried. lloyd: it has obviously been more than eight years since the last one. in europe, for a few hundred years people were told to expect a war every generation, and it hasn't happened. i look for these things. i don't think the mere pattage of time causes it. in the metaphor, you need kindling on the floor of the forest. you need leverage, something that could blow up, and you need the spark. john: what are the signs that you look for? lloyd: today leverage.
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bad behavior. in the context of the last financial crisis, bad origination practices. and then of course the spark could be some macro event, some default that happens, a bad play by the sovereign, bad fiscal policy, a bad monetary policy could be the spark. but a period of time where there wasn't this kindling, wasn't this leverage or opportunity, might passed unnoticed. but at a time when it was ripe for it would cause it. i would say if you are looking for some signs now. earnings are good. you are not really seeing the kind of leverage, but maybe you don't see the leverage until after the fact when you look back and say it was there and i didn't know it. would say credit is two things relatively easy. but on the other hand, it is not remotely close to the leverage that people like us would have financed in the
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run-up to the 2007 2007 crisis the rms of the -- of 2007-2008 crisis in terms of trance. they are not easily seen. the advantage of your job versus my job is i have a p and l, and i can't remember having seen it. john: you do get some other benefits from what you do. [laughter] in terms of that, you look back a lot that period. lloyd: sometimes the even worth it. not always. jeff: you have a long time to reflect on it. what is the thing you think badly during that crunch, and what is the thing you did best? lloyd: the worst thing we did -- look, our risk management was pretty good. we participated in the market. the crisis was in real estate. real estate prices went down, and that was a crisis.
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real estate went down and all the debt in the world that was collateral liesed by real estate by real estate went down, and that was 95% of it. on risk management we didn't know what would happen. we bought and sold stuff. we basically ran a balanced book. the crisis was two halves for us. it was the existential part. did you lose a lot of money? do you have existential risk? would you be insolvent? which we navigated well. and the reputational part of it for having and a half de fratused it well. went from how did you do it admiringly, to how did you do it? do you mean when you were hedging, you sold things to people? you should have known, blah-blah-blah. we didn't make money in the financial crisis. we didn't lose money in those years. but we lost a lot of reputation in those years and a lot was inflict the on us.
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the thing we did the worst as was under appreciating -- we are a wholesale firm. we didn't have our name on our building. we moved to a new building and are thinking of putting our name on our old building. other people has a crisis, and they go around and talk to their customers. we had the view, keep our name out of the paper, put our customers to the forefront. we represent them in ma, but it is not us to get the attention. we had no real advertising budget at all. it turns out about didn't have a consumer business. other names for consumers are tax payers and citizens.
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>> our position in the financial system as a very big influential firm that was influgse in the context of a national crisis that affected everybody. so that was an adjustment we had to make quickly. prior to the financial crisis, i never would have appeared at anything. my predecessors didn't, and it wouldn't have occurred to me. i realized that if you don't describe what you do and help define yourself, you would have left a vacuum that someone will describe and define for you. that was an important lesson and i learned lessons for crisis management that i never expected to need to know. >> if you look at those through he eyes of the stakeholders, consumers, tax payers, do you think the government has represented their interests well? you have all this roll of regulation.
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lloyd: i think the most important regulation and role is the way banking system has been deleveraged forcibly and aggressively. it looked like a medieval fair with all the noises and things, and people around the world would watch this stuff in dismay about this public display. at the end of the day, the u.s. did it. the regulators did it. people write dissertations in the tranquility of some library about they should have done this and shouldn't have done that and they got it wrong. but at the end of the day almost in the heat of battle, they did all this stuff, and it got done. the stress test was done in such an aggressive way. i was the focus of a lot of the aggression. but they were done in such a way that there was no issue about whether it was convincing from the point of view whether it was just soft or whether it was just real. and it actually persuaded the
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credit world that this was real and that the banks were credit-worthy, something that in some parts of europe you are not quite certain many years later. so i would say regulation, which of course in my point of view and view of a lot of people, was thrown together very quickly and there was time for an adjustment. not to repeal it but adjust. john: what is the thing you would like to get changed? lloyd: there is redundancy, leverage test. there was supposed to be a catch-all bank. you are supposed to have capital related to the riskiness of the assets in the balance sheet. there was a general worry that we weren't assessing riskiness in the right way. in the financial crisis, we under estimated the riskiness of certain mortgage assets. using the normal test of leverage, let's have a general
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catch-all where we don't assess riskiness. we will look at all the assets on the balance sheet including dollars in banks. that was supposed to be a catch-all to make sure that nobody -- kind of a version of an alternative tax if you will. well, it got to the point where that catch-all is now the binding constraint. those things have to be adjusted. the vokul rule, which was added to make sure that people had capital against their risky assets and you were able to wind down an institution that was failing. voker imported a state of mind test. what was the reason why you engaged in that transaction? to support a client's business or because somebody wanted to buy low and sell higher? people weren't really thinking that way. it was mark making in doing that.
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that has been counterproductive because the regulators in turn put the bias denver broncos they assume everything is for a bad purpose unless you prove your state of mind for a near term expectation of declined flow. it created. for a time, the bulk of our i.t. was for metrics. it was interfering with safety and soundness. there are things like that that everybody recognizes have to be change the. some people don't want to get into any changes for fear that if you open it up, you wreck everything. but i think after -- the way this was put together and after a period of living with it. think there is room for some adjustment. i don't want to get away from lauding the regulators at the
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time and for people in public sector for handling the war in the fog of war and the aftermath. ll you have you have who do is juxtapose how the u.s. system handled it compared to our counterarea parties in europe. john: people say look at money. it has gone increasingly into the darker areas of finance or away from public markets. it has gone to the bitcoin and crypto currencies on one hand and private equity. is that a trend? lloyd: that is a real problem for all of us. look at the anguishing that you are seeing in the press now for where aramco is going to lift. in other words, in an effort to make our markets pristine, which is a laud torii goal, and
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complex, and the litigation standards. i will tell you, not everything about being a public company c.e.o. is as attractive as it must look to you. john: how would you change it? because it is a real structural shift. lloyd: we make it tougher and tougher and tougher, and companies won't want to be public. you will get a two-track system where you will have very, very tough regulation on companies that are a public company, and increasingly, companies that defer going public with the consequence that their investors are not remotely as well protected. so what do you want? i'm saying -- by the way, this is something -- again, you didn't use the example i used per se, but this is something that the chairman of the s.e.c. said. there are half as many public
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companies in states. f we wanted to toughen up on public companies and everybody else was dealing in private markets, would we have accomplished safety and soundness as a system? no. i am not arguing for a collapse of the systems, but once you do a cost benefit analysis of some kind on whatever incremental benefit you are getting compared to the burdens and the cost you are putting on the system. john: would goldman have worked better if it was an old style partnership? lloyd: i think parts of our business, but it is not something we can rechristmas nature about. we could have elected. the way the world evolved, we started out as an advisor. but in order to be an effective advisor, you had to be able to
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give effect to the advice you were giving. so i could tell you that you could do this merger or do this financially, or i could tell you that you should grow your business in this way. but to be an effective advisor, i had to put capital on the table for you or your benefit or help you raise it so you could achieve that obtive that we agree was good advice. if we were merely advice givers, we could have an important role in the system. there are a lot of investment banks who do well. they don't have 90% of the problems or issues i have in my life as somebody who runs goldman sachs. on the other hand, they are not as important in many ways and not the important institutions that we are. we as a firm decided we like the position that we have as a very important institution and driver of growth and change in the financial system and the evolution of business. we liked who we were.
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and in order to do that, we had to have a balance sheet. and in order to have a balance sheet, we had to have permanent capital, and to do that we had to go public. and we were the last ones to go public. john: how does wall street change over the next 5-10 years? take on one thing. people here have asked about crypto currency. does that become a real issue or not? do you worry about them? you have put your toe in the water? lloyd: not really in any kind of systemic way. it would be very painful for somebody who put therapy entire network into cryptocurrin says. it is not a is systemic issue. people are passionate for it and against it. i remember when they came out first -- when they came out with cell phones, i remember thinking god, who the hell is going to lug this thing around? there are 10 bone booths on
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every corner. this is a fad. nobody is going to carry a cell phone. i passed on that whole thing. turns out to have worked. [laughter] now there is crypto currency. i can't say why it should work, but if it did work, i would be able to explain it in hindsight why it did. john: that has been your secret to success. lloyd: well, you have to look at things from both sides. sometimes in a risk thing i say will this happen. what are the chances of it happening? sometimes i find it easy to think about something. let me postulate this did happen. tell me why it did. i find sometimes an easy way of seeing it i look at the evolution of money. you start out with gold as money, and people only take hard currency, and you make gold coins. a gold coin was like $5. event they would give you a
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piece of paper with the promise that there was $5 in gold to back the $5 piece of paper and you could go and redeem it. then they give gave a piece of paper and you can't redeem it. then they give you the piece of paper and you can't redeem it. we are still doing that today. if you could go through that morphing, go through that fiat currency saying this is worth what it is worth because the government says it is. why couldn't you have a consensus currency. i even no bitcoin. goldman sachs, united states nobody told me has no bitcoin. but if it does work out, i can give you the historical path why that could happen. so i am not in the school of saying gee, because it is uncomfortable or unfamily, this can't happen. this is too arrogant.
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john: people say something that should happen, no woman has run a big wall street company. you set up a $500 million initiative to help women as managers. but you say among the people, as the possibilities to succeed you at goldman, there wasn't an obvious woman on your management committee like that. explain to me, looking back in five years time, whether there a woman running a big wall street firm and discipline it? lloyd: other firms have more senior women. we have had very senior women. people take different career paths. the most senior woman at goldman sachs was the person ho ran -- until actually the end of this month because she submitted her resignation. sometimes people have to work harder at this and get it done. we are working very hard at this. you are right, there is nobody
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who is that approximate. other firms may have different experiences. we have metrics on some occasions that women are at the highest level. it is sad to say and blame, and some of it is fortune and where people have taken them. it is not a unique problem to any of us. that said, it is a problem. people are going to have to work harder at this and we are trying to do it. john: people would say it is a problem generally for wall street. lloyd: no. it is a problem generally for business as a whole. you can look way outside of business too. it is a problem for instance tutions, a problem in walks of more of an equivalence between the demographics after country. it is a gender issue, and it is not just a gender issue. nobody wants to explain it away . there is no explanation, and it looks like you are trying to be exculpatory if you are true.
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we all have to work harder. you are about to point out to a firm we are scommitting to that ll invest in start-ups for women-manage venture funds. we have other programs like this that will support women initiatives, women in the work place initiatives. we have a very good record of sponsoring, a very good record of bringing women into the firm, and like everybody else, a record of being women into the top leadership positions in the firm. john: what has been the biggest thing that has changed in those 36 very quick years? lloyd: well, obviously when i started, because that was a long time ago. it was a generation and a half ago. the big thing i would have said at the beginning of my career was globalization, which sounds like a quaint term now and something that has now gone through a cycle we are all trying to kill. that has gone full cycle.
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but when i came into the firm and i came into the foreign exchange department, we could not issue a confirm in sterling other than a dollar. it didn't print it. i rode the crest of the wave of globalization. now in the last 15 years it is the crest of the wave of digitalization and technology. today if you want a price on an equity or instrument, 99%, could be 100% of the prices we make on a market to market basis are made by algorithms and systemically. it is not just distributed that way. the prices are made off of inputs that are input digitally. that is a kind of new phenomenon. the decision taking is judgment, but the decision is and made by programmers software experts.
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a lot of times i look at somebody -- what used to be call judgment, that is a judgment decision? that is just a few million the business does not frighten you? >> in a variety of ways, of course it does. same thing for uber. drive through that stoplight and into that storefront and injure those people instead of swerving into the wall? know, it say, i didn't was a natural instinct, i couldn't help it, it just happened, it was all a blur. some programmer is going to say, if you see that wall, drive into the wall, or it won't say that.
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those are things that are going to happen. what would you take into consideration when you made that risk judgment? your softwarea and your lines of code and see exactly which you anticipated to have done in this situation. it's an interesting set of phenomena. putting that to one side, the other effective technology is that people can, in a sense, work anywhere. computers can be based anywhere. you are doing stuff in salt lake city. this is the economic club of new york. how did new york prosper in the new age of algorithms and retain its position? what do you worry about from a new york perspective? >> well, it turns out -- remember, the world is flat, everyone will go to the lowest cost place. you will work out of someplace
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on the steps of central europe or central asia. it doesn't work that way. it turns out that people of the creative class like to live amongst each other. they like to go to the theater, to aggregate. and it will not be a world of automatons. and by the way, even though lines of code have to be written, the people who create in the people who get together and the people who engage are going to want to aggregate together. new york has had quite a head start on aggregating together people who were like that and have the infrastructure that tends to attract more people who are like that. i tend not to worry about new york. as long as they don't keep making it so very expensive to be here versus other very, very attractive places.
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>> if you became mayor, you could solve that problem. >> well, if i advocated moving out of new york, it would hurt my chances. [laughter] >> lloyd blankfein, thank you very much. >> thank you. [applause] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org] [captions copyright national cable satellite corp. 2017] announcer: tonight on c-span, the world affairs council of philadelphia hosts a discussion on mass incarceration and reforming the criminal justice system at eastern state penitentiary. the prison was one said to be the most famous and expensive prison in the world. speakers include jeffrey brown, ceo of a regional grocery store chain that started hiring former inmates. way, as we were
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opening the stores, a lot of my customers and community leaders gave me a really good education on the criminal justice system, and helped me to understand why it should matter today. not that it didn't matter to me before, but i don't think i was informed as much as i should be, considering the work i did. god she said was that, bless you for opening stores no one else will, we really appreciate that, but we are never going to be the greatest customers, because so many of us have been incarcerated. once you have been incarcerated, no one will hire you. you are serving people that are always going to live on government and title months -- government entitlements. to,e are not sure who to go but we think you should fix this problem. admit course, i have to that a number of my executives were little concerned about the fact that i agreed. we were thinking about how to approach that, and we figured
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jump in head first is the only way to do it. we hired half a dozen returning citizens, and the next-door we were about to open. surprise, we loved the half a dozen people we hired. some of them went on relatively quick and to the management, making $50,000, $60,000, $70,000 a year. so we hired another dozen. 15 years later, 500 of my 3000 employees are returning citizens. [applause] you can watch that entire discussion tonight at 8:00 p.m. eastern here on c-span. announcer: president donald trump will announce his nominee for the supreme court, filling the vacancy left by retiring justice anthony kennedy. watch the announcement live, monday night at 9:00 p.m.
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eastern on c-span or c-span.org, or listen on the free c-span radio app. announcer: next, a discussion on norton were the cases from the and -- on noteworthy cases, the legacy of thurgood marshall. we will hear from law professors of the federal judicial conference at the fourth circuit in west virginia. this discussion is 90 minutes. >> good morning, ladies and gentlemen. welcome to our final session of the conference today. we are pleased to have a panel on the reflections on the legacy of thurgood marshall as well as our traditional review of the term.

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