‘Government Sachs’ becomes an insider again
NEW YORK — When Gary Cohn, president of Goldman Sachs, walked into Trump Tower this week, it was just one of dozens of meetings President-elect Donald Trump as held with advisers and potential Cabinet picks recently. But on Wall Street, Cohn’s presence represented something much bigger: One of the world’s most important banks is making its way back into Washington’s inner circle.
After years on the sideline, Goldman Sachs, and the rest of the Wall Street elite, are poised to come roaring back.
Trump has already picked several Goldman Sachs alums for several key positions. Steven Mnuchin, a 17-year veteran of the bank, is slated to be the next Treasury secretary and Steve Bannon, Trump’s chief strategist, worked on mergers and acquisition deals for Goldman Sachs. Hedge fund manger Anthony Scaramucci began his career at the New York bank and has emerged as one of Trump’s closest advisers on his presidential transition. According to Politico, Cohn, a 26-year veteran of the Goldman Sachs, is being considered for a position heading the Office of Management and Budget.
Goldman Sachs’ sometimes controversial relationship with Washington goes back decades. One of its founders, Henry Goldman, advised on the creation of the Federal Reserve. President Franklin D. Roosevelt chose Goldman CEO Sidney Weinberg to serve on the War Production Board during World War II. And President Bill Clinton named former Goldman co-chairman Robert Rubin to head the Treasury Department. President George W. Bush picked Henry Paulson, another Goldman alum, for the same job.
Each in turn filled the government ranks with so many more former Goldman executives that the bank eventually earned the nickname “Government Sachs.”
“Throughout its 147year history, Goldman Sachs has encouraged its employees to give back to the community while they are working here and after they leave,” said Jake Siewert, communications director at Goldman. “We are proud that many have gone on to serve their country and their communities after they have left.”
Trump’s elevation of so many Goldman alums may signal a wider shift in Wall Street’s public standing, which has been battered since the 2008 financial crisis, industry analysts say. Even Trump played to public distrust, releasing a television ad that flashed an image of Goldman Sachs CEO Lloyd Blankfein as the Republican candidate warned of a “global power structure” that was robbing American workers.
The public’s resentment towards Goldman Sachs was so deep that Blankfein initially demurred when asked whom he would vote for.
“I don’t want to help or hurt anybody by giving them my endorsement,” Blankfein, who has previously supported Hillary Clinton, told CNBC.
Wall Street insiders widely expected to be largely left on the sidelines if Hillary Clinton had won the White House. They felt Clinton would have found it difficult to resist pressure by progressives in the Democratic Party that she be tough on Wall Street.
But the tone has shifted since Trump’s election.
“After Nov. 8, you could say the financial crisis was over,” said Mike Mayo, a banking analyst and managing director with global boutique brokerage firm CLSA. “It was a pivot from rebuilding the banking industry to using banks to better facilitate better economic growth.”
That has some progressive groups crying foul.
“These guys are galactic deal-makers, transaction merchants, not people who face the extraordinary littleness of life,” Bart Naylor of Public Citizen said.
Goldman Sachs is no stranger to such talk. The bank has been best known as a secretive Wall Street deal-maker with the ear of the White House. It helps big institutions and billionaires but until recently had little interaction with average investors — clients must have at least $10 million for its wealth management services.
But in recent years it has tried to soften its image. It has launched programs to help women entrepreneurs, produced regular podcasts, and earlier this year offered a high-yield online savings accounts for those with as little as $1.