Let us now praise Goldman Sachs, for the sole reason that it and it alone among the major, capital-intensive Wall Street institutions – both recently deceased and still living – actually understands something about risk and risk-taking.
By his own admission, Lloyd Blankfein, Goldman's chief executive, ranks risk management as his number one daily priority, even ahead of doing God's work. “I'm a risk manager and I've been that for a long time, a lot longer than I've been CEO,” he said recently at a breakfast in New York sponsored by Fortune magazine. “I live 98 per cent of my time in the world of 2 per cent probabilities. I live always in the worst case.”
Except for Jamie Dimon of JPMorgan Chase, what other Wall Street chief executive could have uttered those words with even a shred of credibility? Jimmy Cayne, at Bear Stearns? Dick Fuld, at Lehman Brothers? Stan O'Neal, at Merrill Lynch? Chuck Prince, at Citigroup? Ken Lewis, at Bank of America? Not likely. “If I had to focus on a key failure in this crisis, it was the failure of risk management” at other institutions, Mr Blankfein said.