Goldman bandwagon draws Wall Streeters
NEW YORK -- In 2007, when a meltdown in the subprime mortgage industry transformed more than $100 billion in investment-grade mortgage-backed bonds into so much toxic waste, Goldman made money by betting against the housing industry. While several of Blankfein's competitors were fired last fall after losing billions of dollars, Goldman Sachs announced record profit for the year.
Not Goldman. Blankfein announced Wednesday that his firm will spend $100 million in the next five years to launch a philanthropic program, dubbed "10,000 Women." The scholarship program will allow women in Third World countries to take courses developed by top business schools in the USA at their local universities. By enabling business-minded women in traditionally male-oriented societies, the program could spark GDP growth across the developing world, Blankfein said.
In announcing the program at Columbia University on Wednesday morning, Blankfein, 53, referred to the strong tradition at Goldman Sachs of executives devoting themselves to public service after their retirement. "I assure you," he said, "they don't just get that way on the way out the door."
The gold standard
When Goldman Sachs alumnus John Thain was named CEO of Merrill Lynch in November, it was clear he had to fix the brokerage's risk-management systems, which failed in the subprime mortgage meltdown of 2007, causing $8 billion in write-downs in the third quarter alone and leading to the ouster of former CEO Stan O'Neal.
Thain's solution was to have the risk-management department report to him, the CEO, instead of to a lower-level executive. He also announced that under Merrill's new compensation system, end-of-year bonuses would be based primarily on how well the entire firm performed, rather than how well an individual department had done.
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