Lloyd Blankfein (2:26)

Sleep?

Robert Peston (2:27)

Who sleeps?

Steph McGovern (2:27)

Yeah, that's a very good point.

Lloyd Blankfein (2:28)

Occupational hazard. I'm a light sleeper, you know, I do. It's kind of a background noise. I Think there's a different, different social standard of thing. If you do what I do, it's not impolite to always have one eye on a screen or on your phone.

Robert Peston (2:42)

Have you got a screen? Haven't got your screen out.

Lloyd Blankfein (2:44)

It's in my pocket. It's never that far away and it's. And you just, you know, somebody said, somebody said it would be like asking somebody, how much time do you spend listening to music? Well, you listen to music while you do other things. And so it adds up to more than 24 hours a day. But I kind of always know what goes on. And if you're in the news business, you kind of always know the news.

Robert Peston (3:06)

I mean, as somebody as honest. And you do still trade essentially for your own account. How do you make sense of how things are being priced at the moment? Because the volatility is extraordinary.

Lloyd Blankfein (3:15)

Well, I'd say at this point I'm not a professional, it's more hobby. Well, I did do this for a living, for a very long.

Robert Peston (3:20)

You did do it for a living. I don't think it's unreasonable for me to ask your view. Right.

Lloyd Blankfein (3:23)

You adjust to the market. I'm not a criticize of what it is. I just accept what's going on and I try to cope with it. And at times of extreme volatility, where you're not sure where things are going, you're not really in the realm of predicting. You're more in the realm of contingency planning.

Robert Peston (3:41)

So how do you protect yourself?

Lloyd Blankfein (3:42)

I think at this time, you get closer to home, you try to cut your risk. And I don't necessarily do it, but my recommendation to other people would be this would not be a time that you take the most risk that you take. And so you'd opt for safety and you take stock of yourself. What are your needs? And I'd say for the general audience, you don't take risk with an amount of savings that you really might need in the near future.

Robert Peston (4:09)

But in terms of uncalculated risk, I was genuinely staggered at how little the American President appears to have thought through what he's doing in Iran, which is one of the reasons it's so unbelievably volatile in markets. Were you amazed? As amazed as I was, because obviously he is a risk taker and obviously, you know, he does this thing of saying he follows his gut or whatever or what he feels. But even so, to invent, to engage on this level of military commitment without apparently having a plan, it's sort of jaw dropping.

Lloyd Blankfein (4:47)

I think you have a plan. I think if you're going to have a plan, you know, once you launch something like that, it's not just a matter of your plan. You have to take account the other person's plan. And I just think that there's, you know, again, a lot of contingencies of concern. There's levels of surprise and things don't always go the way you like. But by the way, that doesn't mean, that doesn't mean you didn't think about it. It may just be an unpleasant outcome and, you know, you'll have to deal with it. But they're always, they're always sorry. Who is it? Michael Tyson said, you know, you go into a boxing match with a plan and that plan lasts until you get hit in the face.

Steph McGovern (5:20)

We're delighted to say that this year the rest is money is being powered by octopus Energy. So Greg is back with us. Greg, I've got another question for you. So in terms of energy companies, are we just back to the big six?

Greg (Octopus Energy representative) (5:33)

You know what, we've only got like six or so major supermarket chains. No one worries about that because they invest ferociously in competition. You've got differentiation. You know, we thought the market was stable. Then Aldi and Lidl turned up. Competition is not about reinventing the souk with dozens of identical companies. It's about companies having different approaches to looking after customers and competing ferociously on that. Energy could well be going that direction.

Steph McGovern (6:00)

Well, cheers, Greg, and thank you for powering this episode of the Rest Is Money.

Lloyd Blankfein (6:08)

So good, so good, so good.

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Steph McGovern (7:08)

But there's been some interesting things going on, though. If you look at the markets in all of this, in terms of this 15 minutes before President Trump came out and made the announcement about his saying, we've had talks all weekend with Iran. The war is going to come to an end. And 15 minutes before that, people trading in oil predicting that the price is going to fall.

Robert Peston (7:27)

So this and buying, you know, and buy, you know, essentially buying the stock market at the same time, hundreds of millions of what look like illegal profits being made on the basis of insider trading. We don't know that. There is, you know, a lot of data. In fact, it was talked about even in the British Parliament today. Prime Minister's questions that literally 15 minutes before he puts out that truth social post saying he's having peace talks with Iran, massive bets were made on the oil price falling and stocks rising. Massive bets, right. Which just undermines the integrity of markets. Now, there's either been some colossal leak or something even worse than that.

Lloyd Blankfein (8:10)

I'm not in a position to know that. But my observation, and one of the criticisms and the observation I make is that it seems to me that every 10 minutes, we're either about to come to reconciliation or we're about to continue until there's unconditional surrender. So it seems like that kind of posture, I think. I didn't originate this thought, but there was always a slogan about the president, take him seriously, but not literally. So I think if you're going to try to pluck quotes from the last. Even from the last hour, you could find good support for both sides.

Robert Peston (8:42)

But it was this issue of the integrity of markets. This looks like insider trading, basically. And do you have. I mean, Gary Gensler is somebody used to work at.

Lloyd Blankfein (8:54)

I don't have a clue to respond to it. I don't know who knows what.

Steph McGovern (8:58)

But are you surprised by how the markets have reacted to Trump every time he's spoken? Because we've talked about how to begin with. The markets were quite slow to react to certain things.

Lloyd Blankfein (9:09)

I'm surprised how the market. That the market is reacting. I just think it'd be a good time to pull in. And by the way, most of a lot of people in the professional markets are mostly reducing their risk because you really don't know. I think it's risky to bet on a big set of problems, and it's kind of risky to bet that everything gets resolved either way. The market could move a lot from here, and it's kind of reflected. You know, people buy insurance, you know, option premium in the markets, and so those are trading at very high levels. I think people are trying to cut back on their risk. That doesn't mean there are some people who aren't betting on one way or the other, but they're, they have, they have more courage necessarily than I do. But on the other hand, if you're a normal person investing your savings, I wouldn't make huge adjustments at this point because generally geopolitical things like this don't tend to last a long time, although they can. We did have World War II, but most of the time these things are really bad. And in this particular case, the consequences of a long term hike in the price of oil are so severe that, that it seems to me that makes it more likely that there'll be a resolution because there's almost, you know, other than, other than the principle itself, there's a lot of resolution that we would like this over and done with. And I think people are going to put in their efforts to do it one way or the other, either by putting in troops or suddenly discover that you have a basis for compromise. And so this thing will be very, very harsh if it lasts a long time. And on that basis, I think it's then very unlikely to last a long time. If you want to look at what the market thinks you could see. I didn't look at it this morning, but if the price of oil today is $100, the forward price of oil is more like $80. In other words, the assumption the market is making is that this won't last a long time. The market could be wrong, but the

Robert Peston (10:55)

market is often wrong. You've made your career out of trying to judge when it's right and when it's wrong. And I suppose what I'm interested in is if we go back to take you back to the summer of 2007, and I've heard you talk about how I think you were talking about, there was one particular Goldman fund where a movement of multiple multiples of standard deviations, as it were.

Lloyd Blankfein (11:16)

It would have been normal. Yes.

Robert Peston (11:17)

Yeah. And the movements were way above what was normal. And at that point, alarm bells ring in your head and you start planning for the worst, as it were, even if you don't know that the worst is going to necessarily materialize. If you were running a big investment firm at the moment, would you be looking at what's happening? Even if you think there may be a correction that takes us back to something less toxic? Would you be, would you be battling down matches and trying to prevent, protect yourself?

Lloyd Blankfein (11:47)

Yes, the answer, the answer is yes. And it wouldn't be that. You can look if you ran a firm like Ours. Yeah, you can't get out of all your risk because you stand committed to buy from everybody who wants to sell, sell to everybody who wants to buy. That's not always evenly matched. And so you have to take risk. And so you scurry around and if you buy something, if you can't sell the thing you've just bought, you try to sell something like it. And there's risk between those two things. So basically you try constrain your risks in a period of time. You know the language we said time to get closer to home. And by the way, there were two approaches that we had to risk depending on, you know, what the weather was, what the weather was like that day. You know, we have conversations about what risk do we want to have? And then we would say, let's do some risk management here and say instead of predicting what's going to happen, let's just talk about what could happen and what, what contingencies are we going to go into depending on what happens, assuming the worst. At that point, you don't even go around the table and ask people what they think about what's going to happen. You're just going to say what could possibly happen? Even low probability things. Because at times like this where things are happening that never happened before, your sense of what's probable or improbable, throw that out the window. All correlations don't work like that anymore. We're in a new regime. So what can you think could possibly happen? And if it happens, what do you do about it? And then if and when some of those things happen, you can get off the mark faster than anybody else. So at this point we'd be going around and say, what if oil goes to $180 and stays there? What if it, guess what, what if all of a sudden it's done tomorrow, you put on those hedges and then you don't need them anymore, what will you do with them? And you just go on and on and on. And we're now in the realm of contingency planning. That's what we'd be doing.

Robert Peston (13:37)

I see the other side of this. I remember because I've been thinking about these things.

Lloyd Blankfein (13:42)

By the way, what are the secondary causes? What if the people who lose money are the people that owe you money? What are you going to do about the credit worthiness of those people? And so you get secondary order effects, third order effects. That's what we have to be concerned with.

Robert Peston (13:56)

You know, we are seeing, for example, in the private credit market a number of funds making it harder for clients to get their money out. Reminds me a bit of what we lived through 2007 run up to 2008. This combination of what's going on in the Middle east, oil price with the potential fragility of a very big credit market. Separate events that, you know, but they can become connected. And that makes me certainly pretty uneasy.

Lloyd Blankfein (14:26)

Yeah, I would say in this environment. Here's another thing which is not intuitive, that can make you, that makes me uneasy. We haven't had a crisis. We used to have the crisis of the century every four or five years. You know, from the, you know, from the long term capital, the dot com bubble, the Asian financial cr. We had these things in the global financial crisis and that's kind of a reckoning of sorts. One of these crises comes along and everybody looks at their balance sheet and things. You suddenly discover that the things you thought were worth something are worth less. You go to the market, you sell them, it's a reckoning. And then you take your losses and then you have discipline lasting for a time until the shock leaves. Now, we haven't had a reckoning in a long time. And so you think what's been accumulating on people's balance sheets that hasn't been transparent, that they don't know the value of the mere passage of time since the last reckoning in the market creates kindling on the floor of the forest. And so some spark can cause a conflagration. Who knows what that spark could be? It could be the price of oil, it could be a credit event, it could be a fat finger, a mistake on technology, a hack. But at some point something will come along and cause people to realize the stuff that I bought eight years ago that I had marketed X isn't worth that anymore. And now we have to have a reckoning. And that hasn't happened for a while.

Robert Peston (15:47)

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?

Lloyd Blankfein (15:56)

I'm tempted to say I'll let you know 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, 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. We just don't know what they are yet.

Steph McGovern (16:33)

And we have to have it in order for there to be progress.

Lloyd Blankfein (16:36)

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 straight. We just don't know what's going to work. So I think one good thing to ask, 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 dissimilar or be distortive, that people will tell you what they think, 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, is it 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, but with much more with apprehension because the numbers are so big and I've heard

Steph McGovern (17:51)

you say that everyone now is in tech because if you're not in tech, you're bankrupt.

Lloyd Blankfein (17:55)

Well, you're all in. When you get a market reversal, it's pretty extraordinary if you're 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. 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 do. 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 about private credit. About private credit. I think there are issues gonna have to write off some stuff because the

Robert Peston (19:11)

whole point about private credit, it was supposed to be a lending system.

Lloyd Blankfein (19:14)

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 or a market crisis, banks are the instrumentality through which government and central banks get to real people. 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 rates so they could be taken down. The balance sheets of central banks are still too high, but lower than they had been. The fiscal position is getting, you know, certainly in the United States, we're about to spend in a stimulus is coming, interest rates are coming down. The hyperscalers are spending money which is stimulative. 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.

Robert Peston (20:25)

And as you say, the banks themselves also have more capital and liquidity than they.

Lloyd Blankfein (20:28)

That being said, I used to say at the farm, I haven't felt this good since 2007. The point being is you don't know what's going to happen.

Steph McGovern (20:34)

Yeah.

Lloyd Blankfein (20:35)

And so.

Steph McGovern (20:36)

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, as time goes on, the banks then have clients who have transparent. It becomes murkier. And murkier.

Lloyd Blankfein (20:54)

And because they're private deals, nobody's selling bits and pieces of the market. So you don't have real price, 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. 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 certain 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 or it's.

Robert Peston (21:29)

Well, it's liquid up until the moment when nobody's gonna buy it.

Lloyd Blankfein (21:32)

It's liquid till you need to sell it.

Robert Peston (21:34)

I mean, we all remember that from the financial crisis.

Lloyd Blankfein (21:36)

So it's a funny term. So I would say that they're generally. It has certain echoes of it because. But it's smaller. But then, then I'm reminded of what Ben Bernanke and all the 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. I just want to know what we'll do if it gets bigger. Because I don't really. Nobody really knows.

Steph McGovern (22:22)

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

Lloyd Blankfein (22:29)

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 these other things. So sometimes you discover things.

Robert Peston (22:44)

I mean, I remember at the beginning of the global financial crisis, it was, it was extra. The German banks had again such extraordinary,

Lloyd Blankfein (22:52)

huge risk to it. And it was basically a real estate crisis, a bubble all 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 continue. And so you don't know. And that's what's driving People. And again I come back, we haven't won on, haven't had one in a long time. So think of what risks must have accumulated over this much time.

Robert Peston (23:14)

But I'm now gonna say something that is both, I think probably simultaneously flattering and quite rude.

Lloyd Blankfein (23:20)

Which is, let's do half of it.

Robert Peston (23:23)

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. And so were you the exception to the rule at Goldman?

Lloyd Blankfein (23:45)

I don't know. You have to, if you, if you saw my book, I put one of my early review, my reviews in it and you know, and I think my reviews, which was a 360 reviews, 20 different people managed to come up with synonyms for asshole, but different ones.

Robert Peston (24:00)

When I first knew people at Goldman, they felt they were so entitled and you know, they would talk. 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 favor by talking. I mean it was just, it was awful. They were my least favorite people.

Steph McGovern (24:16)

It might have been you.

Lloyd Blankfein (24:16)

That was, it must have been, yes. The one constant theme in all those different people was you talking to them. Oh, I don't know. People are different. I mean I grew up in, I grew up in public. I grew up in what here would be called council housing. My dad was a postman, worked our way up. I, I never, I, 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.

Robert Peston (24:42)

And did you pinch yourself as you were making all this money and rising? I mean it was the most meteoric. But, but also as a firm, I mean Goldman Sachs was the name in investment banking forever was, well, is 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?

Lloyd Blankfein (25:08)

I never had a moment where I was intense 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% of the time they blame us for having caused it. So I Had to worry about all that stuff all the time.

Steph McGovern (25:28)

Can I ask you then? Because I've got this, 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 kids. 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. And 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.

Lloyd Blankfein (25:57)

My kids grew up in a, in a, in a wealthier household and I don't want to throw them under the bus. Yeah.

Steph McGovern (26:02)

I'm not saying it's good or bad.

Lloyd Blankfein (26:03)

They were different. I don't know.

Robert Peston (26:06)

I think second generation, it's the, the hunger is still there.

Lloyd Blankfein (26:09)

Yeah. I think also people from a certain kind of way have a certain kind of imposter syndrome in their head.

Steph McGovern (26:16)

You always assume you're gonna get tapped on the shoulder.

Lloyd Blankfein (26:18)

You always say, you know, you know, this is, 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.

Robert Peston (26:33)

And you were surprised when you got into Harvard?

Lloyd Blankfein (26:35)

Oh, my God. Well, first of all, I, I, I knew that Harvard, I knew Harvard as a brand.

Robert Peston (26:40)

Right.

Lloyd Blankfein (26:40)

So I knew what it was, but I didn't know what it was.

Robert Peston (26:43)

Right.

Lloyd Blankfein (26:43)

You know, the first time I, I, I saw the place was when I went to school there and I got in my, my, my, you know, roommates came from, you know, different kinds of places.

Robert Peston (26:51)

What do you think? So, I mean, at the time, you presumably just thrilled to be there. What, looking back on it, what did,

Lloyd Blankfein (26:56)

I wasn't thrilled to be there. I was scared as hell to be there. I don't.

Robert Peston (26:59)

What did they see? What, what did you do? What did you do to persuade. Because it's quite, it's a big thing to get in. What do you think they saw in

Lloyd Blankfein (27:07)

you 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, they'll take they'll find people in homeless shelters and take that. I wasn't that I wasn't that way. But my scores were very good in math. Something that's intuitive.

Steph McGovern (27:34)

Yeah.

Lloyd Blankfein (27:35)

And poorer. 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. You know, that was associated with my public, you know, my public housing development and stuff like that. And you know, they took me and by the way, I didn't get into other. I didn't get into every school, but I got into the hardest school to get into.

Robert Peston (27:54)

Yeah.

Steph McGovern (27:54)

Lloyd Lordsmore still to talk to you about, but let's sit tight cause we've got to go to a quick break.

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Robert Peston (29:58)

But Simon Robertson, who you hired, he was Eaton, he was establishment. That was not taking a risk. Right.

Lloyd Blankfein (30:05)

That was later. He's a terrific person.

Robert Peston (30:08)

Yeah, he's a very lovely person. But that was, you know, that was archetypal British establishment.

Lloyd Blankfein (30:12)

That was archetypal British establishment, by the way. One had to grow into that here because we are, 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 are a little bit. Were a little bit different than the clubs that people from early Goldman Sachs.

Robert Peston (30:40)

He came from a slightly different background from you, let's be absolutely clear.

Lloyd Blankfein (30:42)

He's an older Tony.

Steph McGovern (30:43)

I just wanted to add to that chat though because my best mate worked at Goldman and my best mate's family were had, were. They 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, there was, there is, you know, that was a big change.

Lloyd Blankfein (31:13)

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 was. 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 necessarily 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 several generations. We thought they were Japanese. The Japanese didn't think they were Japanese.

Robert Peston (31:49)

So did that say. Did that mean for a bit of time you were not really getting the business you thought you deserved?

Lloyd Blankfein (31:56)

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.

Robert Peston (32:03)

Was that an advantage?

Lloyd Blankfein (32:04)

It was an advantage that somebody. 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 Grenfeld or Schroeder's. Or those firms. And it turned out in hindsight to have been an advantage because what as

Robert Peston (32:27)

an insurgent you get more interesting business.

Lloyd Blankfein (32:29)

We got the strivers and at the end of the day, the people that hire you, you know, it's very nice that, you know, it's very nice that you'll, 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.

Robert Peston (32:51)

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. There was this period where you were constantly referred to as a firm as the vampire squid because they said your tentacles were everywhere where. 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 Pulser, you know, Mark Carney, you know, was governor of the bank of

Lloyd Blankfein (33:20)

England, your previous prime minister, the last prime minister, Canada.

Robert Peston (33:26)

So people, so people not unreasonably say Goldman Sachs rules the world, so government. So, so, so, you know, on the one hand you go for these drivers, but then you end up basically with, you know, running the world. It says a sort of contradiction there.

Lloyd Blankfein (33:39)

Gosh, if we were running the world, I would think that I. Why did I, why did I, why was I made to suffer so much if we were in charge of everything?

Robert Peston (33:46)

Oh, come on, you don't look as though you've suffered that much. Come on.

Lloyd Blankfein (33:49)

Some people said I was so good in a crisis, I would purposely cause them just so I could, just so I could show off. Goldman wasn't a revolving 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 that 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 MeToo behavior. You know, don't do that. And to make sure you pay your taxes, we're going to do tax returns for you because. And that. And we're going to set up a Private foundation for you because we expect you to be philanthropic in your career.

Robert Peston (34:38)

And does everybody do that? Do all.

Lloyd Blankfein (34:41)

Oh, yes, they do it. Yes, they did it.

Robert Peston (34:43)

Pretty much everybody who's a partner has a table.

Lloyd Blankfein (34:47)

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. The. The people can designate where it goes to. And you give the right to designate those philanthropic things to time as well as money. Time as well as money was supposed to be on the boards. 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 that no more than three of them touch on Goldman Sachs. We expect you to do other things while you're here.

Steph McGovern (35:26)

That's a way to think, right?

Lloyd Blankfein (35:28)

While you're here. And we expect you leave the firm, there's still gas in your tank. You're supposed to do things.

Robert Peston (35:33)

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.

Lloyd Blankfein (35:57)

We're like the Freemasons or something like. No, no.

Robert Peston (35:59)

But. But you can see why people are slightly. Oh, my God. It's this sort of secret network of people who share, except it's not secret.

Lloyd Blankfein (36:07)

And people were supposed to. We hired people that were supposed to be philanthropic in ideas. They may not have had the money to do it, but they were supposed to think more broadly. They were aspirational. We hired people who think like that. When they get out, you know, at the end of their career, they've made money. How many. How many decades can you go and pitch an IPO or, you know, get a call and there's something, you know, somebody wants a 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. 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, and do that or philanthropy.

Robert Peston (36:52)

So if you got the call to serve in government, what would you say?

Lloyd Blankfein (36:57)

I, you know, I might do it. I would. Yeah, I would think I'd be wired to. 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, My president at the time, my number two guy who might have otherwise succeeded me, got the call and. 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. And so it depends.

Robert Peston (37:28)

But would you have worked for Trump? You're a Democrat.

Lloyd Blankfein (37:30)

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, and he 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 Democratic 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 it. I would not get an opportunity to do that. And I also stayed a long time. I'm older, you know, I didn't leave. I stayed almost 40 years in the firm. And other people leave after 20 years,

Steph McGovern (38:08)

and normally they leave in distress, whereas you left.

Lloyd Blankfein (38:13)

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 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, and again, the financial crisis for us came in two parts, which is the first one being the existential part where you had to manage your 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, you know, and all of a sudden, you know, I was like, the focus to defend Wall street and that and all that. And that was, you know, 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. 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.

Steph McGovern (39:32)

You mentioned being a globalist, and obviously, you know, throughout your career, that was a big part of it, wasn't it?

Lloyd Blankfein (39:38)

I know, it's kind of reversed.

Hargreaves Lansdown Advertiser (39:39)

Yeah.

Disney Advertiser (39:39)

Yes.

Steph McGovern (39:40)

That's what I wanted to ask you about, you know, that kind of mindset change. What do you feel about that?

Lloyd Blankfein (39:44)

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. Why do we need a battery maker in every country? 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

Steph McGovern (40:26)

had their assets like location based, location based.

Lloyd Blankfein (40:29)

Now all of a sudden, no matter what geography it was in. And so, so if Deutsche bank was borrowing money from the Federal Reserve, the assets that the Federal Reserve could look to were in Germany. 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 earths.

Steph McGovern (40:57)

Yes.

Lloyd Blankfein (40:58)

And so all of a sudden, now the supply chains are being drawn in. It matters where things are being produced.

Robert Peston (41:04)

Hang on. 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. The. But 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.

Lloyd Blankfein (41:47)

As an observer in my early life as an observer of the money class, I hate them too. You know, I mean, you know, just as a.

Robert Peston (41:56)

How do you look at yourself in

Lloyd Blankfein (41:57)

the mirror as a member of it? I think I understand the nuances a little bit better. Look, the country is, the countries, I should say, are quite polarized and there's a. 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. 0 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. 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. 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.

Robert Peston (43:22)

The political sector, but 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 skilled, a lot of jobs. Right. We are going to get a greater accretion of wealth for the people who earn these services. 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.

Lloyd Blankfein (43:54)

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. But you've got to allocate it exactly. Whose job is it to do that? Whose job is it to term, 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 more accessible by poorer people. I don't think it's the bank's jobs to do that.

Robert Peston (44:26)

So there's one story that I'd like to ask you about which you. 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 with, even with your friends because it was a price. It was price sensitive. Right. And I mean, is it really true? Until Goldman had put out a press release, you had to pretend that everything was okay.

Lloyd Blankfein (44:59)

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.

Robert Peston (45:16)

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

Lloyd Blankfein (45:20)

There was a lot going on. And by the way, to me, it was kind of a distraction because when I got the, you know, when I got the, you know, I was gonna say verdict, it wasn't a verdict. When I got the diagnosis, 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 by phone and doing this thing. So I.

Robert Peston (45:41)

How did you manage the anxiety?

Lloyd Blankfein (45:43)

You know, I don't understand, like, I was never in the armed service. I was never in combat. When things are going off and things you wonder how you respond to. 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 terms of that, whether it was the financial crisis where there was nine, 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 it to be like the one of the last to leave the building. I had a sense of responsibility. You know, this is your duty. This is what you have to do, do. And it kind of displaces, you know, the kind of thing like, what do I do about myself? It doesn't, it doesn't, it doesn't come Up. And I, I'm not thinking, I'm not an Extraordinarily. I'm not a. You know, it sounds funny my saying 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?

Steph McGovern (46:39)

Because you were in it.

Lloyd Blankfein (46:39)

Who do I get Because I'm in it.

Steph McGovern (46:41)

Yeah.

Lloyd Blankfein (46:41)

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. And, you know, nurses 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. 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 as? Which one should we use on this fabric? 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 is it's an unpleasant prospect, but it's not a hard choice.

Steph McGovern (47:45)

Yeah.

Lloyd Blankfein (47:45)

And so that's how I think about it.

Robert Peston (47:46)

All right, so question then. So you put out the press release saying that you're ill, share price goes up or down.

Lloyd Blankfein (47:53)

Oh, that's interesting. I don't think anyone cared. I think we really was.

Robert Peston (47:59)

It was not a price. It wasn't. I couldn't have insider traded on it.

Lloyd Blankfein (48:02)

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, down. As secretly. As a self involved person, I would like it to have gone down, but the answer is I don't know.

Robert Peston (48:20)

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.

Lloyd Blankfein (48:44)

Those are two sides of the pole when you talk about JP Morgan, the highly regulated and the unregulated side.

Robert Peston (48:50)

But they're still huge. Right, But Goldman hasn't gone for size in the same way, has it? 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?

Lloyd Blankfein (49:10)

We're very, very, very big. We're the biggest investment bank, pure investment bank. We're big in what we do. But you know, you think about the culture of the firm for every part

Robert Peston (49:20)

of Goldman because historically it was about brains. Right? That's what it was about.

Lloyd Blankfein (49:23)

But it still is. We don't have branches, we don't have tellers in, you know, taking to power. Everything we do is still along those lines. So we're a big investment bank. We're one of the biggest asset managers in the world.

Robert Peston (49:35)

But the human brains still count in the way that they did when you started.

Lloyd Blankfein (49:39)

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.

Robert Peston (49:54)

You can't delegate it to a computer

Lloyd Blankfein (49:56)

AI, countless judgment you can make. Again, the fulcrum is the same. 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. And so we were. And by the way, by the way that was part, you know, 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 because we weren't a consumer firm. Nobody banked with us, nobody borrowed. Individuals didn't borrow. We were, 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. 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 hors 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 defensive. Very defensive. And it looked offensive because it was defensive. And so, you know, so we. We learned the hard way. So if 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 at Goldman Sachs, and it's not a virtue anymore.

Robert Peston (52:19)

Well, that's why people didn't trust you.

Lloyd Blankfein (52:20)

Yes, that's why now, though.

Steph McGovern (52:22)

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?

Lloyd Blankfein (52:37)

You know, 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.

Steph McGovern (52:46)

Yeah, we all are.

Lloyd Blankfein (52:46)

Yeah, we all are. Because here we are talking to the public. Obviously, part of that is ego. And people would come to me, a lot of friends, relationships. I miss 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 about, you know, to the firm and to others about the culture of the firm. What was the difference in a partnership ownership culture versus the big companies. And then it started to be a little bit book like. And I think I said in the book, you know, it took a long time because I put the pen down for a couple of years.

Steph McGovern (53:19)

It's a funny book though, as well in all of this, which you wouldn't expect. You know, the way you kind of describe people and characterize things.

Lloyd Blankfein (53:25)

It's funny too, you know, the, you know, the hip hop, you know, the firm so proud of its partnership culture and the debates about going public. And in all the public debates, you know, because. Because we had to go. The firm had to go public.

Robert Peston (53:38)

So the only thing I would say about you have to go public. Okay, because. And this is not just a point about Goldman, you know, because I'd lived through all of this with, you know, the, 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 getting and that. You know it.

Lloyd Blankfein (53:58)

No, no. So everybody was always very conscious, upset by where the firm was, did unbelievable. 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 US 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. 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 yet 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.

Robert Peston (54:53)

Well, so I think at that moment where you are 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.

Lloyd Blankfein (55:04)

But I am, I am willing to suffer the consequences of that fateful decision.

Robert Peston (55:09)

Listen, Lloyd, so nice to meet you. That was enormous fun. Thank you for joining us today.

Lloyd Blankfein (55:12)

Thank you very much, guys.

Steph McGovern (55:13)

I really appreciate. Thank you.

Robert Peston (55:14)

That's all from us.

Disney Advertiser (55:15)

Bye bye.

Steph McGovern (55:15)

Bye bye.

Lloyd Blankfein (55:21)

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