Goldman Sachs CEO to retire

Veteran bank exec will take on the role

NEW YORK — Another Wall Street veteran of the financial crisis is stepping aside: Lloyd Blankfein is retiring as CEO of Goldman Sachs after 12 years at the helm of the storied investment bank.

Blankfein will giveway to David Solomon, a longtime Goldman executive who has been considered Blankfein’s chosen successor since earlier this year. Solomon will assume the CEO role from Blankfein on Oct.1 and become chairman of Goldman in 2019.

The succession announcement came Tuesday as Goldman announced a 44 percent jump in secondquarter profit from a year ago. The performance was largely driven by the investment bank’s core franchises: advising companies on mergers, acquisitions and other deals, andits trading business.

Alongtime Goldman employee who rose through the ranks in commodity trading business, Blankfein took the reins of Goldman

Sachs in 2006, not long before the Great Recession and financial crisis. Goldman and its competitors accumulated billions of dollars of toxic assets on their books— bad mortgages, collateralized debt obligations and other illiquid assets.

In the darkest days of the crisis, it was thought Goldman Sachs might not survive. By late 2008, some of Goldman’s rivals— Lehman Brothers, Bear Stearns and MerrillLynch— were either bought in distressed sales or, in the case of Lehman, went bankrupt.

Blankfein moved to save the firm fromits near-death experience, tapping the Federal Reserve’s emergency programs set up to keep banks from failure. Eventually, Goldman took money from the $700 billion TARP bailout program, which it repaid. In 2009, Goldman reported record earnings driven largely by trading revenue.

But the efforts gave Goldman and Blankfein, who grew up in housing projects, few fans outside of Wall Street in the early years after the crisis.

The bank came under heavy criticism that it benefited from the 2008 government bailout of insurance giant AIG, andwas just as responsible for creating the revolving door of toxic mortgages that led to the crisis. Therewere also accusations that Goldman’s bankers took bets on the mortgage market against their clients’ own positions.

Goldman Sachs’ employees, among the best paid in finance, continued to be paid well despite the mess Wall Street left for the rest of the country.

Congress eventually passed a law— the Dodd-Frank Act— that imposed new restrictions on Goldman’s business.

The firm was brought under the oversight of the Federal Reserve, and is now subject to annual “stress tests” like other big banks.

Goldman shares fell less than 1 percent Tuesday and are down about 10 percent this year, making it the worst performer among the big banking companies in the S&P 500.

Solomon has been with Goldman Sachs since 1999, joining as a partner.