Dear Mr. Blankfein,

If you really believe your firm is doing “God’s work”, I have a camel and a needle to sell you.

But that is not what I want to discuss. I want to discuss your statements in today’s article titled “Blankfein Defends Goldman Sachs Against Breakup”.

“Most of the activities we do, and you can be confused if you read the pop press, serve a real purpose,” Blankfein said. “It wouldn’t be better for the world or the financial system” to change the firm’s activities, he said.

“We pretty much stuck to our investment-banking knitting,” Blankfein said. “That’s why we have 30,000 people and many of our competitors have well over 200,000 or 300,000 people.”

I took a peek at your latest 10-Q — you might try it sometime — and on page 72 I found a nice table that breaks out your firm’s earnings and assets by operating segment. For the quarter ending September 30, “Investment Banking” accounted for $899 million of $12.3 billion in total revenues, $127 million of $4.79 billion in pre-tax earnings, and $1.36 billion of $882 billion in total assets. Those work out to 7.2%, 2.6%, and 0.15%, respectively.

So this gives me an idea. If you just want to do “God’s work” with your “investment-banking knitting”, then surely you would be OK with us taking the rest of the company away? All that sub-millisecond high-frequency trading and front-running pension funds (aka. “market making”) and borrowing from the Fed at 0% to buy Treasuries… That stuff is all just an afterthought, right?

Yes, I should think splitting off the rest of the company and just leaving behind the “investment-banking knitting” would make an excellent compromise. Thank you very much for the suggestion.


1 comment to Dear Mr. Blankfein,

  • EricBarrett

    I think at some point, “breaking up” a company can make each company more profitable than the single original one. The Goldman Sachs issue reminds me of the situation faced by David Rockefeller and Standard Oil (which later became ExxonMobil). The reason for the success rests on the new autonomy of each separate business group obtained, so I think Mr. Blankfein is mistaken in thinking it would harm Goldman Sachs, besides it´s only a “legal entity” decision, they could all become subsidiaries of each other and still act towards a common goal.

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