265. Are we due another financial crisis?

15:48Robert Peston:And I mean, many people say it is particularly in investments related to AI, there are bubble elements. Do you think there is a, is that right? I'm tempted to say, I'll let you know.

15:59Lloyd Blankfein:That's not helpful. That's not helpful. But I think it's helpful in saying that we don't, look, for sure, we're pursuing parts of the technology that won't work. And companies that are pursuing even parts of the technology that will work, it won't work for their company because you don't need 10 companies doing it. You may need three, and there might be 20 companies pursuing it. And so, yes, for sure, there's going to be things that are going to be written off that will turn out to have been wasted, money spent for nothing. And those will be other things, zombie elements of people's balance sheet.

16:32Lloyd Blankfein:We just don't know what they are yet. And we have to have it in order for there to be progress. Yeah, exactly. In other words, I could draw once we get to the future, we can draw a straight line back to the past. We should have taken that straight line. But from here to the future, there's an infinite number of straight. We just don't know what's going to work. So I think one good thing to ask, the one way to ask a question, and I'm not telling you you're a good interviewer, I would always ask people not what you think or what you recommend. Ask them what they're doing themselves. Because very often, and that's not because they're trying to be dissimilate or be distortive, that people will tell you what they think.

17:08Lloyd Blankfein:But then what they're really at the core, what are you doing? And if you ask me what I'm doing, I'm in risky assets. I'm betting with the hyperscalers. I think the AI technology is going to – I don't know which one. Not all the companies work. But I'm trying to play around and be in them because I do think that the AI is going to be highly productive. The big issue is it's going to be so productive that it's going to generate revenue that's going to justify expenditures in some of these companies of over$100 billion a year. That's a real kind of opening question. I'm going along with that now.

17:45Lloyd Blankfein:but with apprehension because the numbers are so big. And I've heard you say that everyone now is in tech because if you're not in tech, you're bankrupt. Well, you're all in. When you get a market reversal, it's pretty extraordinary if you were in it for the long-term success of the prior period and you instantly were out of it and right way when the market changes. So I would say if you have done well for a long time up to this point, you're probably not doing very well recently. And if you were out of the market, you're still out of the market now in a better position to get on this new trend.

18:23Lloyd Blankfein:If it's a trend, I think most of the time, again, I think one of the things in credit now, in private credit, and the uncertainty stems from the fact that it's private, it doesn't trade in the market, it's marked, these are all esoteric credits. And so when you think the value of a credit on your balance sheet, You have to assess it by analogy to something else, imprecise, by analogy to an algorithm, imprecise. You can't sell them in the market, so you're not really sure of the value of it. So it's unknown. So there's a lot of nervousness because of the lack of transparency. If you ask me, again, what I think, I think it's probably the concern is overdone.

19:05Lloyd Blankfein:About private credit. About private credit. I think there are issues. You're going to have to write off some stuff. Because the whole point about private credit, it was supposed to be a lending system. They're not exposed to the instruments themselves, but banks add leverage to these funds. By the way, it's very significant versus the financial crisis. The banks aren't at ground zero of this crisis. In fact, the banks are coming into this in very good shape. And that's important because when you have a banking crisis in addition to a recession or a market crisis, Banks are the instrumentality through which government and central banks get to real people.

19:44Lloyd Blankfein:Governments don't lend money to people. Banks do. And if banks are in bad shape and they get more capital, they husband that capital to increase their reserves. There's never a good time to have a crisis, but this is a better time than most to have a crisis because we're starting from a higher level of interest rate so they can be taken down. The balance sheets of central banks are still too high but lower than they had been. Yeah. The fiscal position is getting, you know, certainly in the United States. We're about to spend and stimulus is coming. Interest rates are coming down. The hyperscalers are spending money, which is stimulative.

20:18Lloyd Blankfein:You don't want a crisis. This isn't the worst time to have had to have one because there's ammunition to relieve it.

20:25Robert Peston:And as you say, the banks themselves also have more capital and liquidity than they have.

20:28Lloyd Blankfein:That being said, I used to say at the firm, I haven't felt this good since 2007. The point being is you don't know what's going to happen. But isn't part of the problem with private credit, it was kind of built off the back of coming out of the credit crunch. So this is, you know, businesses taking on credit privately because they can't get it from the banks. But then as time goes on, the banks then have clients who have been using this. Less transparent, less observed. So it becomes murkier and murkier. And because they're private deals, nobody's selling bits and pieces of the market. So you don't have the real price that somebody would pay in the secondary market to inform your opinion of what this stuff is really worth.

21:08Lloyd Blankfein:So it's sitting on balance sheet, marked to a model, marked to an algorithm, marked to a comparison to something else. And so there's uncertainty. How do you get certainty? You sell it. I know people are throwing around the term. These are semi-liquid. I have to laugh when I hear that because what does semi-liquid mean? Is that like semi-pregnant? Well, it's liquid up until the moment when nobody's going to buy it. It's liquid until you need to sell it.

21:34Robert Peston:I mean, we all remember that from the financial crisis. So it's a funny term.

21:38Lloyd Blankfein:So I would say that they're generally – it has certain echoes of it, but it's smaller. But then I'm reminded of what Ben Bernanke and other regulators said at the beginning of the global financial crisis when it was the worst of the mortgages, then it went to the next tier of mortgages, then it went beyond mortgages. It's, oh, it's going to be limited and restricted to this. So when I say I don't think it'll go to a big problem, I'll have to throw that right. Again, I would say in risk-taking mode, I care about what I think about, how big it is and whether it's going to be a problem. In risk management mode, I throw out my opinion.

22:17Lloyd Blankfein:I just want to know what we'll do if it gets bigger. Yeah. Because I don't really, nobody really knows. But your point is, if it happens now and this does become a crisis, because the banks are stronger than they were in the last. It doesn't feel like it will become. It doesn't feel like it, that it'll become a banking crisis. But these things would be bigger. How about when we discovered that there was mortgage risk in Iceland, US mortgage risk and Icelandic funds or in these other things. So sometimes you discover things.

22:45Robert Peston:I remember at the beginning of the global financial crisis, it was extraordinary that German banks had, again, such extraordinary…

22:52Lloyd Blankfein:Huge risk to it. And it was basically a real estate crisis, a bubble over the world. And that's the nature of a bubble. It wouldn't be a bubble if people had anticipated and planned for it. And so you don't know. And that's what's driving people. And again, I come back. We haven't had one in a long time. So think of what risks must have accumulated over this much time.

23:15Robert Peston:But I'm now going to say something that is both, I think, probably simultaneously flattering and quite rude, which is.

23:21Lloyd Blankfein:Well, let's do half of it.

23:24Robert Peston:Which is you are, you know, very talkative, amusing, apparently very open person. As somebody who spent rather too much of my early journalistic career talking to people at Goldman, Mostly I found them closed, pompous, basically assholes. And so were you the exception to the rule at Goldman?

23:45Lloyd Blankfein:I don't know. You have to, if you saw my book, I put one of my early reviews in it. And I think my reviews, which was a 360 reviews, 20 different people managed to come up with synonyms for asshole. But on the content, different ones.

24:00Robert Peston:When I first knew people at Goldman, they felt they were so entitled. And, you know, I worked at the Financial Times at the time. and I just, you know, it was so unpleasant going to see them because the whole thing was we're doing you a huge favour by talking. I mean, it was just, it was awful. They were my least favourite people to talk to. Oh, come on. That might have been you.

24:17Lloyd Blankfein:It must have been, yes. The one constant theme in all those different people was you talking to them. Remind me. Oh, I don't know. People are different. I mean, I grew up in public, I grew up in what here would be called council housing. My dad was a postman and worked our way up. I never feel, I never, not only didn't I feel entitled, I have to remind myself from time to time what my position was and how people regarded me because I don't I didn't think of myself in that kind of a way.

24:42Robert Peston:And did you pinch yourself as you were making all this money and rising? I mean, it was the most. Meteoric. I mean, but also as a firm. I mean, Goldman Sachs was the name in investment banking forever. Was, was. Well, it is. I mean, forever. Right. And so you're there. Right. You're at this incredible, influential, powerful firm. I mean, what was it like being the boy from, you know, the so-called Brooklyn projects as you rose up?

25:09Lloyd Blankfein:I never had a moment where I wasn't tense or anxious that it would all blow up or something would go wrong. You're right. We were very influential. We had big balance sheet. Nothing could go wrong anywhere in the world where it didn't affect us adversely. And about 94 percent of the time they blame us for having caused it. So I had to worry about all that stuff all the time. Can I ask you then, because I've got this kind of obsession with people who grew up in backgrounds where they don't have that much money, where for whatever reason things are tough, often have a different view of risk than those who've had quite a straightforward, you know, no big events happen in their lives, no big pressure and drama when they're a kid, have a different view of risk.

25:50And actually, those people who've grown up in working class backgrounds, as we would call them, are better at understanding risk and better at dealing with it.

25:58Lloyd Blankfein:My kids grew up in a wealthier household, and I don't want to throw them under the bus. I'm not saying it's good or bad. It's just different. They work hard, too. I don't know.

26:06Robert Peston:I think second generation, the hunger is still there.

26:09Lloyd Blankfein:I think also people from a certain kind of way have a certain kind of imposter syndrome in their head. You always assume you're going to get tapped on the shoulder. You walk in and say, you know, this may be lost on your listeners, but I have a pretty thick Brooklyn accent. And so people know where I, you know, people know, you know, in the States know where I come from. Still, I went to very fancy schools, which you can do. But when I went there, I was pretty awkward compared to a lot of my classmates.

26:34Robert Peston:And you were surprised when you got into Harvard. Oh, my God.

26:36Lloyd Blankfein:Well, first of all, I knew Harvard as a brand. Right. So I knew what it was, but I didn't know what it was. You know, the first time I saw the place was when I went to school there. And I got in. My roommates came from different kinds of places. What do you think?

26:52Robert Peston:So, I mean, at the time, you were presumably just thrilled to be there. But looking back on it, what did they say? I wasn't thrilled to be there. I was scared as hell to be there. What did they see? What did you do? What did you do to persuade? Because it's quite, it's a big thing to get in.

27:06Lloyd Blankfein:What do you think they saw in you? The more confident a school is, the more risk they'll take. So if you're a striving university trying to impress other people that apply, you take people with the highest scores possible so you can then tell the world that we take kids only with the highest scores possible. If you're Harvard, they'll find people in homeless shelters and take them. I wasn't that way, but my scores were very good in math, something that's intuitive, and poor, pretty poor in verbal. I'm a pretty verbal person, but I'd never read a book through in my failing high school that I went to that was associated with my public housing development and stuff like that.

27:49Lloyd Blankfein:And, you know, they took me. By the way, I didn't get into every school, but I got into the hardest school to get into. Lloyd, loads more still to talk to you about, but let's sit tight because we've got to go to a quick break.

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29:29Robert Peston:Zootopia 2 has come home to Disney+. Let's go! Get ready for a new case. We're the greatest partners of all time! New friends. Gary the snake. And your last name? The snake. Dream team. The new habitats. Zootopia. has a secret reptile population. You can watch the record-breaking phenomenon at home. Zootopia 2, now available on Disney Plus Rated PG. Right now, you can get Disney Plus and Hulu for just$4.99 a month for three months with a special limited time offer. Ends March 24th. After three months, plan auto-renews at$12.99 a month. Terms apply. But Simon Robertson, who you hired, he was eaten, he was establishment.

30:04Robert Peston:That was not taking a risk, right? That was later. But to be fair.

30:08Lloyd Blankfein:He's a terrific person.

30:09Robert Peston:Yeah, he's a very lovely person. But that was, you know, that was archetypal British establishment.

30:13Lloyd Blankfein:That was archetypal British establishment. And by the way, one had to grow into that here because we are the firm that does the biggest business with the most established companies. And that's kind of what our aspiration was. And guess what? We sort of, we were the dog that ran after the bus and we caught the bus. So that's how the saying goes. So Simon Robertson is, yes, his clubs were a little bit different than the clubs that people from early Goldman Sachs were. He came from a slightly different background from you. Let's be absolutely clear about it. He's an old Etonian. I just wanted to add to that chat, though, because my best mate worked at Goldman's.

30:49And my best mate's family were immigrants. They'd fled Ghana. and my best mate got a scholarship to a private school and then was at Imperial College with me doing chemistry. And she got head, you know, got headhunted basically there because she's really smart and got taken on at Goldman's. And so there was, there is, you know, that was a big change for her.

31:14Lloyd Blankfein:It's kind of, look, I like to think I've been out for a while, but that really is like that. If you take away the covers, my number two was in American University, not Princeton University, you know. It's a culture that's like that, but it was a real advantage. By the way, same thing happened in Japan for us. I mean, not that you're interested in that, but it turns out that a lot of the Japanese that we hired early were ethnically Korean. They'd been in Japan for several generations. We thought they were Japanese. The Japanese didn't think they were Japanese.

31:50Robert Peston:So did that mean for a bit of time you were not really getting the business you thought you deserved?

31:57Lloyd Blankfein:No, in a bit of time we were not getting the people that were the ones that were sought after by the traditional Japanese firms.

32:04Robert Peston:But was that an advantage? It was an advantage.

32:06Lloyd Blankfein:What somebody would have thought was a disadvantage because those people who were socially connected didn't want to work for an American firm. By the way, in the UK, the people that were socially advantaged didn't want to work for Goldman's. They wanted to work for Morgan Grenfell or Schroeder's or those firms. And it turned out in hindsight to have been an advantage.

32:27Robert Peston:Because what, as an insurgent, you get more interesting business?

32:30Lloyd Blankfein:We got the strivers. And at the end of the day, the people that hire you, you know, it's very nice that you can meet at the same clubs. But what they really want is competence and capability. And they want to be made better. And they want to succeed. And they want to win. Of course. And so when you think of yourself, which attorney do you want on your side? The one, you know, the one that.

32:52Robert Peston:Although there is there is a sort of paradox here because, I mean, I'm sure it's a phrase that you detest. But, you know, everybody was this period where you were constantly referred to as a firm as the vampire squid because they said your tentacles were everywhere. And even now, if you look at the Goldman alumni, and I might ask you why you have chosen not ever to do a government job, but your predecessors, Hank Pulsar, Mark Carney, was governor of the Bank of England.

33:22Lloyd Blankfein:Your previous prime minister, the last prime minister of Australia, Canada.

33:27Robert Peston:So people not unreasonably say Goldman Sachs rules the world. So, on the one hand, you go for these strivers, but then you end up basically with running the world. There's a sort of contradiction there.

33:40Lloyd Blankfein:Gosh, if we were running the world, I would think that why was I made to suffer so much if we were in charge of everything?

33:47Robert Peston:Well, come on, you don't look as though you've suffered that much.

33:49Lloyd Blankfein:Come on. Some people said I was so good in a crisis, I would purposely cause them just so I could show off. Goldman wasn't a revolving door for government. We didn't hire from government. Government hired from us. And the fact is when we – by the way, and this was sort of an entry requirement at Goldman. One of the things at Goldman, when you became a partner at Goldman, a new partner, you sat down and the minister of interior, whatever that partner was called at the time, would sit you down and tell you this is what's expected of you. And you go and say, you know, you aren't supposed to behave that in any way that would be what they would characterize today as me too behavior.

34:27Lloyd Blankfein:You know, don't do that. And to make sure you pay your taxes, we're going to do your tax returns for you. And we're going to set up a private foundation for you because we expect you to be philanthropic in your career. And does everybody do that?

34:41Robert Peston:Do all the managers and directors?

34:42Lloyd Blankfein:Oh, yes. They do it. Yes, they did it for you. So pretty much everybody who's a partner has a charitable. And today, the firm, part of your pay comes in, you know, the firm is philanthropic. But instead of the CEO deciding where philanthropy does, we divide that. People can designate where it goes to and give the right to designate those philanthropic things to hundreds of people in the firm. Time as well as money. Time as well as money was supposed to be on the boards. It was good for your career, good for the firm. And the other thing they said to you was, and this sounds a little dark, but it wasn't intended to be dark, that if you – at the end of your life, if you get an obituary written about you and it's nine paragraphs long, Make sure no more than three of them touch on Goldman Sachs.

35:25Lloyd Blankfein:We expect you to do other things while you're here. What a way to think. Right. While you're here and we expect you to leave the firm, there's still gas in your tank, you're supposed to do things.

35:34Robert Peston:Hang on a second. There's also a contradiction because another thing that you talk about, which I think is true, is that with your alumni, even if they've spent 25 years doing something else, they think of themselves as Goldman people. Which is partly why there are conspiracy theorists who say you are this awful Masonic network and you are running the world.

35:58Lloyd Blankfein:We're like the Freemasons or something like that.

36:00Robert Peston:No, no. But you can see why people are slightly, oh, my God, it's this sort of secret network of people. Except it's not secret.

36:09Lloyd Blankfein:And people were supposed to. We hired people that were supposed to be philanthropic and ideals. They may not have had the money to do it, but they were supposed to think more broadly. They were aspirational. We hire people who think like that. And so when they get out, you know, at the end of their career, they've made money. How many decades can you go and pitch an IPO or, you know, get a call and there's something, you know, somebody wants to consult with you in Beijing. So you get on a plane and you fly to Beijing on a Saturday so you can be there first thing Monday morning. It gets a little bit stale after a while.

36:43Lloyd Blankfein:That's what, you know, even I felt that way after a while, even though I stayed there much longer. And so you say, what am I going to do next in my life? And, you know, it's very appealing to be in government service and do that or philanthropic.

36:53Robert Peston:So if you got the call to serve in government, what would you say?

36:58Lloyd Blankfein:I, you know, I might do it. I would, yeah, I would think I'd be worried. It depends what, you know, I left the firm in the second, you know, second part of President Trump's first term, by which time he had dispensed with globalists. my president at the time, my number two guy who might have otherwise succeeded me, got the call and he took the job and lasted, you know, more than a year, but not much longer than a year and several other people in the administration. And I don't, you know, and I'm not, I didn't get another call. And so I didn't do it. So it depends. But would you have worked for Trump?

37:31Lloyd Blankfein:You're a Democrat, I thought. So were some of the people who went into the first term. Okay. Including, I believe, I didn't ever, I never asked him to testify to this, but I believe my Gary was also a Democrat. It was much more open time. It's gotten a lot more, the country's gotten a lot more polarized. The right, you know, the Republican has, the energy in the Republican is much more from the right. The energy from the Democratic side is much more from the left left of the Democratic Party. And unfortunately, we're in a polarized world. And I do, I would not get an opportunity to do that. And I also stayed a long time.

38:04Lloyd Blankfein:I'm older. You know, I didn't leave. I stayed almost 40 years in the firm and other people leave after 20 years. And normally they leave in distress, whereas you left. Well, I would say that most of the people who had my job often get carried out feet first in that position. And I'll tell you why. When things are going well, you don't want to leave. And when things are going badly, you can't leave unless they make you leave. And that's why a lot of people go. And again, but I was a risk manager and I looked at it and I said, I waited, you know, we went through the tough times of the financial crisis.

38:39Lloyd Blankfein:And again, the financial crisis for us came in two parts, which is the first one being the existential part where you had a manager thing and, you know, make sure everything was on the up and up. And we did pretty well on that. We didn't lose a lot of money unlike everybody else. and then came, you know, of course, the reputational part of it, which was, you know, you had to, you know, and all of a sudden, you know, I was like the focus to defend, you know, Wall Street and that, and all that, and that was, you know, quite intense for years after that. And when that was all over and said and done and the pendulum shifted again and everything was fine, I said, you know, this might, I don't want to leave because I just went through all this, you know, the painfulness of the crisis and its aftermath, math.

39:21Lloyd Blankfein:But gosh, if I stay longer in time for the next crisis, I'll be here for another 10 years, and I didn't want to do that. And then the next level of succession would have been lost. You mentioned being a globalist. And obviously, throughout your career, that was a big part of it, wasn't it? I know, it's kind of reversed. Yes, that's what I wanted to ask you about, that kind of mindset change. What do you feel about that? There's been a shift in sentiment, and undoubtedly, it'll shift again, as it has many times in the past. But when I, you know, most of my career, you know, it was concerted central bank intervention.

39:58Why do we need a battery maker in every country?

40:02Lloyd Blankfein:We should have three for all of Europe. And countries were joining the EU, not Brexiting from the EU. You know, everything was getting easy. And there were a lot of things that happened, a lot of data points that affected that calculation. The financial crisis was one of them because suddenly everybody was coordinating their activities, all these government central banks. But when it all hit the fan, it became very important where the institutions had their assets. Like location-based. Location-based. Now all of a sudden, no matter what geography it was in. And so if Deutsche Bank was borrowing money from the Federal Reserve, the assets that the Federal Reserve could look to were in Germany.

40:41Lloyd Blankfein:And that was a big difference. And guess what? The Germans weren't releasing them. And we had another set of data. We had another set of data during COVID. It mattered where the vaccines were manufactured as to who got them. And all of a sudden, territory mattered again. It matters who has the rare earth. Yes. And so all of a sudden, now the supply chains are being drawn in. It matters where things are being produced. Hang on.

41:05Robert Peston:But that is a sort of rational explanation for why some of globalization has been rolled back. But there is another big political driver, which is related to the conduct of financial institutions like Goldman, which is we've seen the rise of these populist parties on left and right. and a lot of that has been driven by hatred of bankers in their terms and investors who they say responsible for the global financial crisis but kept all their wealth. And so do you not ever sort of wake up and say, my God, this mad political world is connected to the perception that we caused the problem but we kept the money?

41:48Lloyd Blankfein:As an observer in my early life and as an observer of the money class, I hate them too. You know what I mean? How do you look at yourself in the mirror? As a member of it, I think I understand the nuances a little bit better. Look, the countries, I should say, are quite polarizing. And, you know, you could say, oh, it's the bank. But really, we've come through technology contributed to this and also monetary policy, low interest rates for a long time. asset prices have gone up a lot. Wealth has been created. Financial system has to do at least two things. It has to create wealth, and then it has to distribute wealth according to the values of the society.

42:36Lloyd Blankfein:We've all done a much better job of creating the wealth and a much poorer job of distributing it. And so the rich have gotten richer because they have the assets that have accreted in value. And the people without assets haven't gotten richer. And the gap between rich and poor has widened. And the resentments have widened and the polarizations have widened. Now, I'll say, now people will fight with me. I'd say the financial system creates wealth. I think it's really the political system that has to allocate the wealth and figure that out through progressive taxes, the social network, making healthcare free and better.

43:15Lloyd Blankfein:The political sector has to do that job. I think in a lot of ways, the financial sector and the economics has done a better job than the political sector. The political sector is kind of paralyzed.

43:25Robert Peston:Undoubtedly, that's true. And this problem that you've highlighted is only if AI is what it seems to be, which is essentially a technology that's going to replace a lot of low skilled and not only just low-skill, a lot of jobs, right? You know, we are going to get a greater accretion of wealth for the people who earn these services. For sure in the short term, absolutely. But no government is currently looking at how do you get some of that wealth back to the people who are going to lose their jobs.

43:56Lloyd Blankfein:I find it hard to be against anything that makes us more productive. Of course. And so, but in the short, so it's going to make us all rich. We have to allocate it either through progressive taxes, safety. Exactly. Exactly. Whose job is it to do that? Whose job is it to turn? Sure. Whose job is it to make the taxation system more progressive? Whose job is it to raise the safety net for people so that the things that rich people can easily pay for are more accessible by poorer people? I don't think it's the bank's jobs to do that.

44:27Robert Peston:So there's one story that I'd like to ask you about, which is towards the end of your time, you get this awful cancer, lymphoma. You know, my late wife had cancer, so I know how unbelievably grueling having chemotherapy is. But apparently you were unable to talk about this, even with your friends, because it was price sensitive, right? I mean, is it really true that until Goldman had put out a press release, you had to pretend that everything was OK?

45:00Lloyd Blankfein:You started this conversation when we first started with, was there insider trading? Did somebody have information? It is a material bit of information. If the CEO of the company might be, you know, there might be a change of leadership in a company. And so you couldn't. And my poor, you know, it fell on my poor wife.

45:18Robert Peston:Yeah. How did she feel, for God's sake? I mean, that she couldn't talk to people.

45:21Lloyd Blankfein:There was a lot going on. And by the way, for me, it was kind of a distraction because when I got the, you know, when I got the, you know, I was going to say verdict. It wasn't a verdict. When I got the diagnosis, you know, it was all a distraction. And, you know, people are doing all these tests on you while this is going on. I'm having a board meeting with my board and, you know, by phone and doing this thing. So I.

45:42Robert Peston:How did you manage the anxiety? You know, I don't understand.

45:47Lloyd Blankfein:Like, I was never in the armed service. I was never in combat. that when things are going off and things, you wonder how you'll respond to it. And it's an analogy, and it's a very poor analogy, and I shouldn't have gone down this road because physical courage may be different from it. But I just found that the only thing that I was thinking about in times like that, where there was the financial crisis, where there was 9-11 when our building is a block away, and, you know, I had to be the last one to leave the building. I didn't want to be like the one the last to leave the building. I had a sense of responsibility.

46:17Lloyd Blankfein:You know, this is your duty. This is what you have to do. And it kind of displaces, you know, the kind of thing like, what do I do about myself? It doesn't come up. And I'm not thinking I'm not an extraordinarily – you know, it sounds funny to me listening to myself say this. But I didn't give that much of a thought. I said, you know, what do I do to protect the company? What do I do about this? Because you were in it. Because I'm in it. Yeah. And who do I call to get this done? So, look, I made a lot of observations. You know, when you're getting chemo and I had something like 600 hours of it, you know, for the particular kind of lymphoma I had.

46:55Lloyd Blankfein:And, you know, a nurse is coming in and changing the infusion bag that you're getting this stuff. And she's coming in wearing a hazmat suit, lest a drop of this get on her skin while they're pumping gallons of this through you. And but I would say, and this comes up a lot when you're thinking whenever I'm doing something that's like this, no choice, no problem. You know, I didn't have a choice. So it wasn't hard. It was unpleasant, but it wasn't hard. For me, hard is when my wife shows me two, to my eye, identical colors of blue, shades of blue, and says, which one should we use on this fabric?

47:33Lloyd Blankfein:This color blue or that color blue, and they both look the same to me. That, to me, is a hard choice. Whether or not to get chemo, when it's the only thing that's going to save your life, it's an unpleasant prospect, but it's not a hard choice. Yeah. And so that's how I think. All right.

47:48Robert Peston:So question then. So you put out the press release saying that you're ill. Share price goes up or down?

47:54Lloyd Blankfein:Oh, that's interesting. I don't think anyone cared. I think we were... It was not a price.

48:01Robert Peston:I couldn't have insider traded on it.

48:03Lloyd Blankfein:To be perfectly honest, it was a distraction. As a committed person who cares about my company, I would hope it would go up, but secretly... No doubt. As a secretly, as a self-involved person, I would like it to have gone down. But the answer is, I don't know.

48:21Robert Peston:And then there was one other sort of general point about the world we're in and the sort of the nature of a firm like Goldman Sachs. So one of the things that has happened and sort of accelerated, I think, a bit since you left is there are all these other financial firms that have just got absolutely enormous, like JP Morgan, enormous balance sheet. BlackRock, Blackstone These are enormous

48:45Lloyd Blankfein:Those are two sides of the pole When you're talking about J.P. Morgan The highly regulated Sure And the unregulated side

48:51Robert Peston:But they're still huge Right But Goldman hasn't gone for size In the same way Has it? He'll not, you know And similarly we've got Institutions like Jane Street Which are all about technology I just really wondered How do you see the future Of a Goldman in this challenging world?

49:11Lloyd Blankfein:We're very, very, very big. We're the biggest investment bank. No, you are. Pure investment bank, you are. We're big in what we do. Sure. But, you know, you think about the culture of the firm. For every part of Goldman Sachs…

49:22Robert Peston:Because historically it was about brains, right? That's what it was about.

49:24Lloyd Blankfein:But it still is. We don't have branches. We don't have tellers in, you know, taking deposits. Everything we do is still along those lines. Right. So we're a big investment bank. We're one of the biggest asset managers in the world. But do human brains still count in the way that they did when you started? Yes, yes, yes. Ever more so because it's more leverage. Because when you think of all the technology, it leverages someone. But if you're at the fulcrum of that lever, which is still a person exercising judgment, the lever has gotten bigger. You can't delegate it to a computer. You can make, again, the fulcrum is the same.

50:03Lloyd Blankfein:The board that's on the fulcrum is bigger and bigger and longer and longer, and the leverage pulls more. But if anything, it made the person at the center, the exerciser of judgment, much more important than that person ever was. And all the businesses of the firm stayed along those lines. And that's fine. And the institutions that you mentioned are all fabulous. The firm that I left was not a consumer-oriented firm. For sure. And so we were, and by the way, that was part, going back to an earlier part of the concern, that created problems for us. Because we were influential, very important, very big, but had no relationship with the general public.

50:44Lloyd Blankfein:Yeah. Because we weren't a consumer firm. Nobody banked with us. Nobody borrowed. Individuals didn't borrow. We were associated with the mortgage crisis. Go get a mortgage from Goldman Sachs. We weren't in that business even. And we get. So we were very, very easy to characterize. And so before the financial crisis, I never would have been doing this. What I'm doing today with you never would have appeared on television. We didn't market ourselves to the general public because the general public, shame on us. We didn't think it was that relevant to us. But another name for consumers are citizens, taxpayers, and we had no relationship with them.

51:23Lloyd Blankfein:And we found out the hard way that it would have been better if they had an understanding of who we were, what we did, how important we were, and what a constructive role we played in the economic system. But guess what? We hadn't had that relationship. Nature pours a vacuum. And that got filled in in a very disadvantageous way for us. As we talked about. And that we talked about. And so guess what? We got on our horses. And suddenly, we introduced ourselves in a way. And when you're doing that in a stressful time, it's suddenly it's a bad time to do it because it looks very excuse, very defensive.

52:01Lloyd Blankfein:And it looked offensive because it was defensive. And so, you know, so we learned the hard way. So somebody said, what's the biggest mistake you made? It was making a virtue out of a lack of transparency. We had that. That was earlier in a virtue with Goldman Sachs, and it's not a virtue anymore.

52:20Robert Peston:Well, that's why people didn't trust you.

52:22Lloyd Blankfein:Yes, that's why. Now, though, so, you know, with the book you've written, I understand that you started writing this as kind of memories for your kids and things. And it's obviously turned into something much bigger that everyone can read. What do you want to demystify then? What's the kind of take home you want for people? You know, look, there's nobody. Nobody who writes a memoir can feign indifference as to whether they get attention or not. So I must be greedy for attention. I must miss it in some way. Yeah, we all are. Yeah, we all are. Because here we are talking to the public. Obviously, part of that is ego.

52:53Lloyd Blankfein:And people would come to me, a lot of friends, relationships. I missed some of that engagement. And also people coming to me, there were a lot of stories. So it started out writing stories. Then I would be asked to speak to the firm and to others about the culture of the firm. What was the difference between a partnership, ownership culture versus the big company? And then it started to be a little bit book-like. And I think I said in the book, it took a long time because I put the pen down for a couple of years. It's a funny book as well in all of this, which you wouldn't expect, you know, the way you kind of describe people and characterize things.

53:26It's funny, too. You know,

53:29Lloyd Blankfein:the firm's so proud of its, you know, partnership culture and the debates about going public. And in all the public debates, you know, because we had to go, the firm had to go public.

53:39Robert Peston:So the only thing I would say about you have to go public, OK, because this is not just a point about Goldman, you know, I'd lived through all of this with, you know, the British stockbrokers and banks and all the rest of it, is there is something weird about the generation that happens to be the owners at the time you go public.

53:58Lloyd Blankfein:No, no. So everybody was always very conscious, upset by what the firm did unbelievably distributed money out. The limited partners, retired partners got big pieces. But it was still an embarrassment to the firm that they were voting. They might vote themselves to get rich. But we were a firm that gave advice in a world that had switched. In the U.S., the regulation divided commercial banks that lent money from the advice givers investment banks. When they took down that barrier, in order to be a good advice giver, you had to be able to finance the advice. You had to have a big balance sheet. So you had to be a public company that could raise money in the public markets.

54:36Lloyd Blankfein:But everybody was so embarrassed about it that in every debate that the firm had, everyone was against going public. and then somebody had the bright, but it was inevitable. It had to be done. So then when they had an anonymous ballot, all of a sudden it went from overwhelmingly against to overwhelmingly for, and that's how it happened.

54:55Robert Peston:Well, so I think at that moment where you are apologizing for being incredibly rich and embarrassed by, at this point I think people are throwing their speakers out the window, we probably should wrap it up. I am willing to suffer the consequences of that fateful decision. Thank you so much. Listen, Lloyd, so nice to meet you. That was enormous fun. Thank you for joining us today. Thanks very much, guys. I really appreciate it. And that's all from us. Bye-bye. Bye-bye.

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