Goldman's Prince Charles Should Sit Tight

The burning question is when Lloyd Blankfein, 58, will leave the firm to make way for Gary Cohn, Goldman's 52-year-old Prince Charles.

According to Goldman Sachs chief executive officer Lloyd Blankfein, this is what happens when "somebody who was assigned to Goldman Sachs didn't have anything good enough to write for a while." In any case, thanks to the New York Times's Susanne Craig, succession at Wall Street's top firm is back in the news

The burning question is when Blankfein, 58, will leave the firm to make way for Gary Cohn, Goldman's 52-year-old Prince Charles. Wall Street history is littered with CEOs and senior partners who refused to give up center stage in a timely manner. And who can blame them? There are few jobs around that command the power, prestige and financial remuneration of a Wall Street monarchy. Given the many heads that usually have to be chopped off to get to wear the crown, why would anyone give it up voluntarily?

Goldman bosses are no exception. When the outsider Waddill Catchings wouldn't relinquish the senior partnership of Goldman after nearly single-handedly bankrupting the firm in the early 1930s, it fell to firm scion Walter Sachs to take a train from New York to Chicago to meet with Catchings, chop off his head off, and place Sidney Weinberg on the throne. When, in the mid-1960s, after three decades at the helm, Weinberg wouldn't turn over the role of senior partner to an impatient Gus Levy, Levy exhiled Weinberg from Goldman's downtown offices at 55 Broad Street to stew in a small outpost in the Seagram's Building in midtown.

More recently, of course, Henry Paulson knee-capped senior partner Jon Corzine in 1999 -- just months before Goldman went public -- by cleverly using the governance structure Corzine had created to round up the four votes of his fellow top Goldman executives he needed to get rid of the boss. Paulson left Goldman voluntarily in 2006, but only because George W. Bush made him an offer he decided he couldn't refuse: becoming Treasury secretary.

"The only capacity we've ever seen taken out of banks is banks merging with each other over the last 50 years," Goldman Sachs Group Inc. President Gary Cohn said. "Now we are actually seeing banks withdraw from investment banking and the capital-markets business." Photographer: Peter Foley/Bloomberg

The problem for Cohn is that, post-bailout, there is no prospect of Blankfein being offered a government position worthy of his leaving Goldman. And now that the firm has made it through its auto-da-fe and is again tops on Wall Street, there is no reason to depart. It seems
unlikely that Blankfein will pull a Dick Fuld, whose 14 years at the helm of Lehman Brothers ended abruptly when he drove the firm into liquidation in September 2008. Nor is he likely to blunder strategically, as Lazard's Michel David-Weill did in 2001 by allowing the fox Bruce Wasserstein into his hen house.

My advice to Cohn: Don't do anything rash. If you really want to be CEO of Goldman, just
continue to be patient; it worked for John Whitehead and John Weinberg, who jointly succeeded Levy in 1976. Bide your time and always remember: Uneasy lies the head that wears a crown.

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    William D Cohan

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