Power Grab Gone Wrong Doomed Goldman's Evans
If you ask me, the announced year-end retirement of J. Michael Evans, the 56-year-old vice chairman of Goldman Sachs Group Inc., sends the not-so-subtle message to the firm's rank and file that in GoldmanWorld, raw power grabs are frowned upon, regardless of the extreme level of talent possessed by the person doing the grabbing.
Evans, you may recall, was a co-chairman of the high-profile internal "business standards committee" established in 2010 after the Securities and Exchange Commission and the Senate's Permanent Committee on Investigations called into public question whether the firm was adhering to the first rule in its playbook: Clients always come first.
In its letter announcing Evans' retirement, the bank acknowledged the role Evans played on the committee: "Over the last three years, as co-chair of the firm’s Business Standards Committee, he helped oversee the most extensive review of the firm’s business standards and practices in its 144-year history. The committee’s work resulted in significant changes in how the firm addresses important issues related to clients, reputational risk and accountability."
Left unsaid, not surprisingly, was the observation made by many Goldman insiders at the time the committee's work was under way that Evans was using his platform, in part, to position himself to succeed Lloyd Blankfein as Goldman's chief executive officer. The committee, the theory went, was pushing an argument that traders such as Blankfein and Gary Cohn, the longtime heir apparent, had made the firm lots of money, yes, but at the unacceptable price of seemingly sacrificing the No. 1 commandment. (Evans, whose jobs included running global growth markets and Goldman Sachs Asia, was free from the taint of the trading floor.)
But just as Voltaire wrote in "Candide" that it was found necessary to execute a British admiral "to encourage the others," it was important to maintain discipline at Goldman by showing Evans the door, after a respectable time period.
There is no question of Evans's great talent and energy, nor of his qualifications for the top post. Ah, but fealty to the man who wears the crown is one of the prerequisites of success on Wall Street. And that is why Evans had to go: With the spotlight off Blankfein at the moment -- thanks to Jamie Dimon's struggles at JPMorgan Chase & Co. -- Blankfein will be leaving Goldman when he is good and ready, and not a moment sooner. That's a message Gary Cohn has received loud and clear.
(William D. Cohan is a Bloomberg View columnist. Follow him on Twitter.)