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Goldman Sachs Former Chief Whitehead Says NYSE Deal ‘An Insult’

Goldman Sachs Former Chief Whitehead
John Whitehead, former co-chairman of Goldman Sachs, seen here in 2008. Photographer: Marko Georgiev/Bloomberg

Feb. 11 (Bloomberg) -- John C. Whitehead isn’t celebrating the 219-year-old New York Stock Exchange’s plan to be acquired by Germany’s 18-year-old Deutsche Boerse AG.

“I think it’s a terrible idea and I hope it can be stopped,” Whitehead, the 88-year-old former co-chairman of Goldman Sachs Group Inc., said in an interview yesterday. “It would be an insult to New York City, and New York State, and indeed to all America.”

The erstwhile U.S. deputy secretary of state, NYSE director and Lower Manhattan Development Corp. chairman said his experience gives him the credibility to speak out against the potential takeover.

“I speak out rarely, and this is one time when I can’t hold myself back,” he said, adding that the exchange is an “important symbol” of American capitalism and of New York City’s status as a global financial center. “I think of it as a holy institution,” he said.

Whitehead, whose autobiography “A Life in Leadership” chronicles his command of a landing craft at Omaha Beach on D-Day, said his opposition has nothing to do with his World War II experiences. “I’d be anti- any other country buying the New York Stock Exchange,” he said. “It’s not that it’s German.”

Whitehead, who joined Goldman Sachs in 1947, said he remembers visiting the exchange in his early days at the firm.

Proud Chairmen

“I remember the various chairmen of the New York Stock Exchange, and how important they were in the world of finance,” he said. He added that Gustave Levy was “as proud” of chairing the NYSE as he was of leading New York-based Goldman Sachs, where Whitehead followed at the helm.

He wouldn’t discuss NYSE Euronext Chief Executive Officer Duncan Niederauer, who had been a 22-year Goldman Sachs veteran when he joined the exchange in 2007, other than to say, “I cannot believe that the board and the president and the staff would be in favor of this idea.”

Robert Rendine, global head of communications at NYSE Euronext, owner of the exchange, declined to comment.

Naomi Kim, a spokeswoman for Deutsche Boerse in New York, said the exchange declined to comment beyond its Feb. 9 statement announcing the merger talks. Deutsche Boerse shareholders would get about 59 percent to 60 percent of the combined companies’ equity, with dual headquarters in New York and Frankfurt, according to the statement.

The combined firm would be the world’s biggest exchange owner, handling equities worth $15 trillion. Earlier on Feb. 9, London Stock Exchange Group Plc agreed to buy TMX Group Inc, owner of the Toronto Stock Exchange.

Endorsing Competition

Whitehead said the consolidation makes him uncomfortable.

“Competition among stock exchanges is a good thing, not a bad thing,” he said.

Whitehead, who spoke out in 2007 about Wall Street’s “shocking” salaries, said he hopes New York Governor Andrew Cuomo and Mayor Michael Bloomberg will, “how should I say, carefully consider” the merger. “I would like to say about the CEOs of the listed companies: I’m appealing to them to speak out,” he said.

Bloomberg, founder and majority owner of Bloomberg News parent Bloomberg LP, voiced support for the transaction at a news conference yesterday.

“I think it’s very good for New York,” he said. “You’ll have the two strongest stock exchanges together.”

To contact the reporter on this story: Max Abelson in New York at mabelson@bloomberg.net.

To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net.

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