tv The David Rubenstein Show Peer to Peer Conversations Bloomberg May 27, 2017 3:30am-4:01am EDT
♪ >> we're just starting? just like this? i don't even know. when you were growing up, you didn't have a lot of money. was money something you thought about? clicks everyone else in california was wearing togas. >> people seem to blame goldman for more of the sins of wall street more than anybody else. could this be life-threatening? lloyd: life-threatening, for sure. david: do you think, maybe i should step down as ceo and smell the flowers a little bit more? >> would you fix your tie, please? david: people would not recognize me if my tie was fixed. let's leave it this way. all right. ♪
david: i don't consider myself a journalist. nobody else would consider me a journalist. i began to take on the life of being an interviewer even though i have a day job of running a private equity firm. how do you define leadership? what is it that makes somebody tick? all right, are you ready? are we ready? ready? ok. we are here with lloyd blankfein who has been chairman of goldman sachs for 10 years. i don't think any of your predecessors in the last two decades stayed that long. is that right? lloyd: i'm sure it seems that long but they didn't stay that long. david: let's talk about your early life. you grew up in new york city. when you were growing up, you didn't have a lot of money. was money something you thought about when you were growing up? did you want to have a lot of money? what were you interested in when
you were a young boy? lloyd: i didn't think about money because i went to school with kids like us. so i didn't know -- i don't know if it would have changed me, had i known, but i didn't know the range of possibilities. i did not know we were not well-to-do. i grew up in brooklyn. david: your father worked -- as my father did -- in the post office. lloyd: they were colleagues. david: right. mine worked in baltimore, yours worked in brooklyn. their job was to file the mail. sort the mail. so you weren't wealthy. you went through public schools. but obviously did pretty well because you were valedictorian of your class in high school. so you realize you probably were smarter than the average student. lloyd: i knew that ranking high in my school meant i was certainly good at school. but i didn't know how smart i was or how i compared. by the way, being good at school and being smart are two seperate separate things anyway. david: were you surprised when
you got into harvard? did you think about not going because you couldn't afford it? lloyd: let me take a step back. my parents did not go to college. it didn't occur to me to apply to that fancy a school. i have heard of it obviously. i knew i was going to go to college but i didn't assume -- i didn't even know what it would have meant -- i remember reading a separate piece about prep school. i didn't know what a prep school was. i know what is now. but i didn't know what those things were. so it wasn't like i had expectations. i know that no other kid from thomas jefferson high school went into the ivy league that year but somehow there was some guy from harvard spoke to me and encouraged me to apply. and the school waived the application fees and everything. and i wasn't that spectacular. it wasn't like i had perfect board scores or anything. i don't know what made them want to invest. but they did and i got there and i was grateful. david: when the you got there, did you say, these kids are smarter than me? or they are not as smart as me? lloyd: i did not get to smart versus not smart. i had to get to the idea that we
are from different planets. the first thing i did when i got accepted to college, my parents took me to something called the male shop on ralph avenue in brooklyn where they bought me, for $40, sports jackets, slacks, burnt orange pants -- the kind of things that, i wouldn't say i fit the demographic. when i got to harvard, i'm sure my roommates from the new england prep school community looked at me like i was from some foreign planet. and i could tell that look. i was nuanced enough to tell that they were looking at me like i was some different species. david: were you an athlete or a scholar? lloyd: a swimmer in high school. i could never have been good in college even if i was good in high school in new york city. but, and i went there, and i tried to do that. i wasn't going to be any good. david: did you not try out for
the summing team? lloyd: oh, i did. david: i've heard you say you were still swimming -- lloyd: i did. i was not built for speed. you can take one look and see that. i was built more for endurance. i did this longish race, and you are swimming. and while these other kids who started with me were out and showered and back in class by the time i was finished swimming. so i went from there to the boathouse to find another sport. david: when did you decide you wanted to be a lawyer? lloyd: when i started harvard, i was 16. in addition to being provincial, i was young. by the time i had sorted things out, i took science courses. i wasn't sure what i wanted to do. i toyed with the idea of being an academic. i was a good student, but i wasn't that good of a student. and, you know, it dawned on me that at some point, i need to pay off student loans and earn a living. so i thought i would be professional and i applied for law school and i didn't take time off in between. so i went to harvard law school. david: you went to the new york
law firms right afterwards? lloyd: i got job offers at some. and i didn't get job offers at others. david: but you wound up at donovan leisure? lloyd: another firm hired me first. i accepted the job in the tax department. this is a famous new york law firm. i got a call from them. after i had accepted the job and some months had gone by and they called me and said you know, we have over hired for the tax department, so we will move you to the corporate department. and i said well, i want to be a tax lawyer. and they said, we overhired. they didn't have a spot for me. i said, tell me. how many slots do you have? they said four. i said how many people did you hire? they said five. i said, i'm fifth on the list of four people? we don't look at it that way. and i said, look, i can't come to work for you. so there was another firm that i also liked.
i originally did not sign up for it. but i went there. david: you went there and did you practice tax law? lloyd: i did. i got thrown onto cases. some very interesting cases involving the entertainment industry. i moved for two years out to california. it was kind of a nice lifestyle. i was in l.a. david: wow. were you wearing leisure suits? or not quite there? lloyd: no, everyone else was wearing a toga and i was stepping over them on a saturday morning in a three-piece suit on the way to the office. i realized i was a little bit out of sync. david: i practice law as well. your career was probably better than mine. i wasn't a good lawyer. my clients made that clear. your clients thought you were good at that. but you thought you wanted to leave? lloyd: i remember my friends are going to finance jobs. and at that point it wasn't the be-all or end-all. there was not thought you could make more money. the job i took eventually paid less money than the money i was making at that point.
i was a fifth year associate. i was going to be starting over at another firm. so i applied to a few wall street firms. i did not know a lot about them. i had a job interview at morgan stanley. goldman sachs was a different firm. i got turned down by all of them probably for a good reason. i didn't know much about it. there were a lot of people coming up. there is no reason to grab onto me. it may have been acquired by goldman or was about to be acquired by goldman but it was a separate company and it was managed separately. eventually, as a result, i was integrated into the goldman sachs firm. david: did you ever meet a person who turned you down at goldman? lloyd: i knew who it was. david: are they still here? lloyd: no, this is 36 years ago. for many years after i got there there would be no one threatened by being at odds with me. it took me a while to work my way up the letterhead. david: did you feel like you are ready to be the ceo of goldman
david: you wound up as the vice chairman of goldman sachs? lloyd: well, you know, it took a couple of years. when i was living through it, it wasn't so quick. i got involved in sales and trading and over time, i became a vice-chairman of the firm. one of several. but my particular coverage was over all the sales and trading businesses at that time. david: the trading businesses were the ones when you could lose a lot of money so quickly? so you are worried about people under you making a big mistake? how do you monitor that? lloyd: it was good training for
the job i'm in now. i spend 99% of my time worrying about the 1% of things that could go wrong. it leveraged two things that are normally not virtues but are in this context. it leveraged my add and my paranoia. david: when you became vice-chairman, you were under hank paulson, the ceo. he seemed to like it. he said he was never going to go to the government. and then george w. bush eventually persuaded him, and he came back from the meeting saying he would take a job -- what did he say to you? did you feel like you are ready to be the ceo of goldman sachs? lloyd: i never felt like i was ready to be the ceo. i've been the ceo for 10 years and i don't feel like i'm ready to be the ceo of goldman sachs. but there was a conversation. we kind of knew that he was being asked to do that job. he came back and he talked to me.
i was very comfortable with my job. i liked the place. for the previous 15 years, i was in the last job i could be in. other things opened up, but i reported to people, my contemporaries at the firm for a long time. i didn't think i would necessarily rise and have quirky things happen. he told me that he was offered this position and he planned to stay in the firm for a longer time and not take the job. there was still the possibility that when he did the math, that he would's -- he would leave at a certain age, i would still be young enough. and i said, that's fine. it's not like i'm waiting to take your seat. so it's fine. but notwithstanding him saying that, i guess he got another call to go in, and he decided to take the job. no big surprise to me. david: so you became the ceo? lloyd: i got the call from hank. hank is an intense guy who works seven days a week and 24 hours a day. i did too. he said i'm going to have to go down to washington to take this.
there will be an announcement on tuesday after memorial day in the rose garden, and i want you to fly down with me so we can discuss the transition. president bush: i am pleased to announce that i will nominate henry paulson to be treasury secretary. lloyd: i was thinking, do i need to do this? i need to discuss this transition to me. in his mind, we were discussing his transition to his next job. i kept waiting to hear from him. where the keys were buried. all we were talking about was his transition. his head was in another place, as it should have been. david: so he took the job and you got the job and not too long after, the u.s. economy went south. lloyd: i remember that. david: and we went into the great recession. so when did you realize the u.s. economy was heading further south than people thought it could? lloyd: running a bank and worrying about the risk profile of the institution and what was going on. to tell you the truth, in hindsight, everybody knows
everything and everyone remembers having known everything. but in reality, every day that something happened, it was just incremental. david: you went down to the office of the secretary of treasury and he said, we have a problem and i'm going to make you take $25 billion to shore up your balance sheet. was that something that you really wanted to do? lloyd: it is very hard to remember how you felt. i think i'm pretty good at it. being a trading manager, you are always evaluating people's performances and trying to separate yourself from what you know personally. otherwise you are a second guesser. and i remember when i was -- what i was thinking. i remember thinking at the time, thinking this would make things safer. and i had an element of relief about it. because it was going to stabilize things. was there a level of risk out there that i wouldn't have been comfortable with? we spent money in our personal lives to insure ourselves
against very remote risks. there was more than a remote risk at that point. not a certainty but certainly a non-remote risk that there would be a domino effect and that things would spiral out of control. so the fact that things were done -- did we need to have it done? not necessarily. but did we eliminate the risk that should not have been born? the answer is yes. the only thing we know is that the world didn't spin out of control. i will just say as a risk managing kind of person, i can't tell you that it needed to have been done. but people were going to sleep at night with much more risk than responsible people should have taken with the global economy. david: people seem to blame goldman for more of the sins of wall street than they blamed anyone else. why do you think that was? and do you think it was fair? lloyd: you know, i think there were a number of factors. one, you can't escape the first
factor, which is that we were very involved in things. for all the advice that we give, no one was asking us for advice on how to manage our public relations. we were flat-footed. we have been an institution for our whole lives. we didn't have a relationship with the american public. another name for the public is consumers and taxpayers. we did not have a consumer business. so we became the symbol of the mortgage business, but we didn't do mortgages. we bought mortgages from other firms and if you are buying mortgages from another firm, you are giving cash to them to do other mortgages which means we are an enabler of behavior. the accusation was, and it was born out by settlements where we agreed to a set of facts where we might not have done the due due diligence on mortgages that were acquired. so there is behavior in there. that is one factor. there was also the issue that we managed our risk pretty well in
that crisis. and whereas a lot of firms out lost $20 billion, $40 billion, $50 billion as a firm, and indivduals got wiped out, we obviously didn't make money in the crisis but we didn't lose money in the crisis. so we came out relatively unscathed. and looking like we needed to be punished in other ways. david: goldman now is much more involved in philanthropic activities, at least visibly. you have the 10,000 women, 10,000 small businesses. is this a response to some of the image issues? lloyd: historically, i would say goldman sachs has been very philanthropic throughout our lives. when i became a partner, i was taken aside at goldman sachs and they said run your life and when somebody writes an obituary about you, if they have nine paragraphs, no more than three should be written about goldman sachs. you should have a more diverse life. you should do things after goldman like public service. and i would say, in general, we never publicize what we did
anywhere. we never saw goldman sachs commercials. we didn't even advertise the name of us on our building. after the crisis, we realized one of the things we needed to do was we didn't communicate enough with the public to let them know who we were and what our contribution was to society. it wasn't an emphasis to say we are entrepreneurial. we have never not been. david: personally you have been involved in a number of philanthropic things yourself. would you ever going to -- would you ever go into government and follow your predecessors as secretary of treasury or something like that? lloyd: without hesitation, i would like to be wanted to do that. i would have to think about it. in this environment, i can say you won't argue with me on the point that i don't think an invitation is likely to come. david: you never know. lloyd: but you never know. i'm not soliciting it. but it would be crazy. people would say oh, i wouldn't want to do that.
of course you want to make a contribution. david: how do you define leadership? what are the examples in your mind of what it takes to be a great leader? lloyd: different institutions and different cultures require different things in different times. you have to be optimistic but not so optimistic that you lose credibility. you have to be willing to take a punch. you have to have a compass. you have to be, if not charismatic, then at least articulate because you have to bring people along. you have to get people to behave well. i said in the crisis to people that remember, act well now. i said this to my partners. because people are going to remember forever how you act in this critical time. so think about it. because we are going to get through this. and your reputation that you form in this period of time will stay with you forever. david: did you go for a second and third opinion just to be sure? lloyd: my whole life is about risk management and due diligence and worrying about
you were diagnosed with lymphoma. how did you deal with that when you learned that treatment was necessary? did you think about stepping back from goldman? lloyd: i started having some what in hindsight were symptoms at the time. they were easily explained in other ways. i had a cough. summer allergies, i thought. i had pains when i exercised. i have never been this age before. i started to lose weight. but i was always trying to lose weight. i just thought i was unusually disciplined. but when i collected that stuff i went in to see a doctor. first, saw nothing because they didn't even think to test me for what i had. they prescribed allergy medicine and then a couple of weeks later, it didn't go away so i took a full cat scan. that lit up like a christmas tree. so they called me and said i had lymphoma. david: when a doctor tells you, did they say you could treat it?
it is just a matter of treatment, or did he say it was life-threatening? lloyd: life-threatening, for sure. there are 70 different kinds of lymphoma. hodgkin's, non-hodgkin's, different things. each one carries its own risks. i have the more aggressive type which is dangerous. more dangerous, obviously. but it is curable. david: so you had to go in three or four days for chemo? lloyd: the treatment that i had was six three-week cycles. so for three weeks, six times on a cycle basis. the first 4.5 days of the cycle, about 98 hours or so, i would be getting chemo night and day continuously. david: did you go for a second and third opinion, just to make sure? or were you comfortable with the initial prescription? lloyd: it's funny. you don't know how to react to things until you live through them, but my whole life is about risk management.
worrying about details. when this happened, it was so quick that i knew when i had the cat scan, i knew i had lymphoma but i didn't know what type. i had to have a biopsy. which is general surgery, and then it takes a week to figure out what you have. and then you go back and report to you. and the way these things work and the peculiarity of my being ceo of a public company, you really can't tell anybody until you tell everybody. so my wife and i could tell nobody. so during this period of time, including on the way to the hospital to get the biopsy, i had a press schedule and a televised thing with a lot of reporters. i went through and did that whole thing, went to the hospital. had the biopsy. waited five days for the report. i went to get the results of the report, and the thing was so kind of advanced and it was so mandated what the treatment
would be, i literally went upstairs from the doctor who delivered the results to me right upstairs to, you know, strap on the first chemo treatment. so i did not get a second opinion. david: so the treatment is now been completed, is that right? lloyd: yeah. david: now that you have had this, you are in remission? lloyd: right. david: so that means you are always subject to being hurt again in some way but generally -- lloyd: in fact, i should have been worried before i knew i had the problem at all. i should have been worried the first time. now, i'm on edge because i'm worried about getting it for the second time. if i had known better i would be worried about getting it the first time. david: when you heard about the description of what you had and the necessary medication, do you think maybe life will be different for me and maybe i should step down as ceo and smell the flowers a little bit more? lloyd: i am very reality-based. maybe i'm not that spiritual, i don't know. i just -- i was focused. i got the news. again, the news of what is
happening, i knew it was lymphoma. i got on the telephone and people said, you know, how jarring was that? it is a funny way to think about it but in some extent, i am a fatalist in some ways. you know, every time i've ever gotten a physical and the doctor called up and said there was nothing wrong with me, i was shocked. so finally somebody called me and said something was wrong with me. i said, par for the course. david: when i first met you, you did not have a beard. now you have grown a beard. obviously you have kept it. is it a permanent addition? lloyd: it shaved itself when i had the chemo treatments. it isn't a victory but it is a sign of gaining. so for my wife, i think it was very symbolic to allow the beard to reassert itself. david: let me wrap up by asking you about your legacy. what would you like your legacy to be? lloyd: you are founder.
i'm not a founder. goldman sachs was a great firm when i got here. and hopefully it will be a great firm when i leave. and so what i want to contribute is i want to make -- i want to leave the firm at least as good, but let me be more ambitious, stronger than it was when i found it. more influential. important, but given what we have had to work our way through, i would like to leave the firm as being viewed as important and with a positive influence to the american economy and culture. so we still have work left to do. ♪