Thursday, November 15, 2007
The World According To Goldman Sachs
The stars are all aligned and the planets all converge to make Goldman Sachs and its alumni the most powerful "club" in the financial world. Merrill Lynch has just announced that it will appoint John Thain (the current head of NYSE Euronext) to be its CEO. Yes, Thain was a former mortgage bond trader at Goldman Sachs before rising to the top as president &COO of the esteemed firm.
Possibly the last piece of the puzzle will be whether Robert Rubin (ex-Goldman Sachs CEO as well) will be appointed to replace Chuck Prince at Citigroup. It looks likely and this "club of insiders" will almost control the global financial world. They already have Henry Paulson (another top alumni from GS, former chairman & CEO of GS) as the Treasury Secretary.
The thing is that is only the surface, Goldman Sachs' alumni is a headhunter's paradise for the very top financial and political jobs in the US and most of Europe. Here are a few examples:
a) GS will not be leaving its mark at NYSE Euronext following Thain's exit as Thain's successor will be Duncan Niederauer, an ex-MD & co-head of GS equities execution services.
b) The Treasury Undersecretary in the US for domestic finance is Robert Steel (former GS vice chairman). One of his important role is to direct bailout vehicle for banks with the huge Structured Investment Vehicles (SIVs), the cumbersome off balance sheet items of major banks and brokers.
c) One of the very top hedge funds manager globally, Edward Lampert (who currently is the chairman of Sears after having bought into the company) is from GS risk arbitrage unit.
d) Robert Kaplan, the current head of the highly influential Harvard Management Company, was an ex-vice chairman and head of GS investment banking unit. He replaces the highly successful but underpaid El-Erian. The endowment fund is around US$35bn.
e) The current governor of the Bank of Italy (central bank), Mario Draghi, is a an ex-MD at GS.
f) The current governor of Bank of Canada (central bank), Mark Carney, is also an alumni.
g) At the Federal Reserve Board, just a notch below Bernanke, sits William Dudley, another alumni, an ex-MD and ex-chief economist of GS. He oversees domestic open market in the US and forex trading operations and the provision of account services to foreign central banks.
h) The upcoming chairman of the Federal Reserve Board of New York will be Stephen Friedman, another GS alumni.
i) Robert Zoellick the new top guy at the World Bank was an ex-MD & chairman of Goldman's International Advisors unit.
p/s my bet for the next CEO for Citigroup will be the brilliant Jamie Dimon, the current CEO of JP Morgan Chase. He was the wonderboy under Sanford Weill at Citigroup but left Citigroup after losing a power struggle with Deryck Maughn in 1998. Jamie has since showed his mettle by building up Bank One speedily before merging it with JP Morgan Chase. Homecoming queen in the making. The position at Citigroup will be highly attractive to Jamie as it will prove he is "the man" in the end.