Fortune put on a breakfast with Goldman Sachs CEO Lloyd Blankfein this morning at Bobby Van’s Steakhouse a couple doors down from the Time & Life Building. First came coffee and pastries, and then a conversation between Blankfein and Fortune editor Andy Serwer.
It was pretty entertaining, and Blankfein came across as more of a mensch than your average CEO. Serwer opened with, “We were going to serve calamari because squid is associated with Goldman Sachs.” Blankfein laughed and said, “How long were you thinking of that?” Serwer observed that Blankfein has been on a “charm offensive” lately. “This is not a calculation,” Blankfein joked. “Charm just pours out.” Then he turned it around: “I think I’ve got the offensive part down pat. It’s the charm …”
But there clearly was one seriously self-interested corporate talking point that Blankfein was trying to get out. It’s that Goldman’s success is our success.
Serwer asked about Goldman’s big third quarter profits. Blankfein said, “Our business correlates with growth. Once it starts to turn, we get very involved in that process. We benefit from it.” Later on, Serwer asked how Goldman makes money. As part of his response, Blankfein brought up Goldman’s principal investments: “Behind that investment is wealth creation and jobs.” Somebody in the audience asked about credit default swaps. Blankfein said, “I think they serve a real social purpose.” And after joking about the charm offensive, Blankfein got serious and said, “Most people don’t interact with Goldman Sachs and they don’t know the pivotal role we play in the financial system. I’m just trying to take pains, which we should have done all along, to make people understand what we do in the world.”
What Blankfein seemed to be trying to get across—although he’d never be so crude as to say it outright—is that what’s good for Goldman Sachs is good for America. That’s a claim for which the evidence is, shall we say, less than conclusive. This has been a pretty great decade for Goldman Sachs, but it hasn’t been for most Americans. Median household income is down substantially since 2000. Lots and lots of Goldman’s business comes from overseas, and the past decade actually has been pretty great for the global economy as a whole, so maybe what’s good for Goldman Sachs is good for the world. But then, Blankfein brought up 1994 as Goldman’s worst year in memory—the partners actually had to give back money to the firm that year to make sure more junior employees got paid. Well, Goldman was a lot more U.S.-centric then, and 1994 was actually an okay year for U.S. economy. Real median household income rose 3%. Bad for Goldman, good for America.
There was also an interesting moment where Serwer was asking about the big bonuses to come for Goldman employees, and whether Blankfein felt at all obliged to ratchet pay down a little. “I’m certainly not blind to the interests of our wider society,” Blankfein said. “But I cannot do too much that subordinates the interests of our shareholders.” So that whole “social purpose” thing has its limits.
Do we need a financial sector? You betcha. But whether the particular variety of financial system that has evolved here over the past 30-40 years, with Goldman more or less at its pinnacle, is good for America is another question—and I certainly am not going to rely on Lloyd Blankfein for the answer.
Two other Blankfein statements of interest:
1) “Less than a year ago, the financial press was describing the Goldman Sachs model as a bankrupt model.” (That is, the investment bank was dead.) “We went from, ‘You have no hope and it’s a bankrupt model,’ to now ‘You’re too big, too powerful, too influential.’” The lesson he takes from this (and it’s actually a pretty good one): “At a time when everybody is saying the same thing, they can’t all be right. They can all be wrong.”
2) He sorta kinda seemed to endorse the Obama Administration’s Consumer Financial Protection Agency, which the financial industry as a whole totally hates. He took pains to say that Goldman wasn’t taking a stand because the legislation wouldn’t directly affect it, but added, “You’d have to say thematically that doing more for that area is warranted.”
Update: Here’s Colin Barr’s take on the breakfast.
Update 2: And now there’s video.