The Coup At Goldman

Monday, Jan. 11, was a painful day for Jon S. Corzine, the leader of Wall Street's most prestigious investment bank, Goldman, Sachs & Co. That morning, from his unassuming office at 85 Broad Street in the heart of New York's financial district, Corzine called clients and regulators to tell them his astonishing news: He was no longer chief executive of Goldman Sachs. One call was to William J. McDonough, president of the Federal Reserve Bank of New York. "I think he is a very fine human being and a high-quality professional," says McDonough, who negotiated with Corzine the rescue of Long-Term Capital Management last September. "Personally, I will regret that I will not be able to work with him as closely as I did in his previous capacity."

Later that morning, Goldman put out a terse press release, with the news that Corzine "has decided to relinquish the CEO title." He would remain co-chairman to help with the initial public offering of Goldman's stock, which was postponed when the stock market plunged in August and September. The news about Corzine shocked the Street. Employees were "blown away," says one senior manager. Securities & Exchange Commission Chairman Arthur Levitt Jr. says: "I think he's probably as broad-gauged a leader as the industry has seen since [former Goldman Senior Partner] John Whitehead." Some Goldman clients were equally unnerved by Corzine's demotion, with one corporate client even saying he may take his investment banking business elsewhere. "My confidence in Goldman Sachs depends on my confidence in Jon Corzine," he says.