Opinion
Blankfein: Automated trading software introduces unprecedented scale for multi-billion dollar losses
“Before this technological age, not just AI, but in general, could you have had a mistake that could cost billions of dollars? Not really, but now you can leave a piece of software, could go out and do 70,000 transactions. The leverage in these things is themse…”
Insight
Blankfein: Managing risk mostly means persuading hesitant employees to take more risk
“But, you know, we have a lot of risk takers. And I would say that the biggest challenge for management is the risk management side, which is really getting people to refrain from risk. Which is about a third of the time when you're in that business, and by the…”
Assertion Supported
Blankfein: Robinhood incorrectly claimed to offer government-insured accounts early on
“I looked at, you know, Robin Hood, great company. But early on, you know, they declared a kind of they declared that they had government-insured accounts that weren't government-insured. They had some slip-ups and a lot of apologies get made. You could do that…”
Assertion Supported
Blankfein: Goldman Sachs fully hedged its 2008 AIG exposure with collateral agreements
“We were fully hedged because we had bought credit protection. Right. But we also had a collab. So we go, we, a single A credit, got a collateral agreement with AIG AAA.”
Prediction Not checkable as stated
Blankfein: The large language model market will eventually consolidate to two winners
“The world may not need 10 large language models. Maybe it needs four will be winners, and two will be very big winners, and the other two will get by, and maybe it'll get reduced over time to two.”
Prediction Not checkable as stated
Blankfein: AI automation will not create permanent mass labor displacement
“Turn back the clock at the beginning of the 20th century. More than half the country was in agriculture. Guess what? A single digit percentage is today. People found stuff to do. We'll find stuff to do.”
Insight
Blankfein: Halting AI development is futile because knowledge cannot be unlearned
“You're not gonna get people to be stupider than they are or unlearn things they've already learned. You can wish that atomic, that the atom had never been split, because maybe the adverse consequences of atomic bombs are worse than the benefits of nuclear powe…”
Prediction Not checkable as stated
Blankfein: Western institutional investors will make fewer investments in China going forward
“We're not gonna be making as many investments in China as we once did. There's not none, but it's not gonna be as much.”
Insight
Blankfein: Active social media posting offers no value and high cancellation risk
“Being in the risk management business, I always know that everybody keeps doing that, and eventually you get, Canceled because you do, you know, you do something, you step over some invisible line that, you know, that nobody knew about. And so I realized that …”
Insight
Blankfein: Risk meetings should prioritize concrete action plans over debating probabilities
“And when you go around the table for those meetings, you're not so much interested in what people think about the future, where things will go. You just want to know, forget about what you think the likelihood, improbability of something happening is. What wil…”
Insight
Blankfein: Never tell reporting employees 'I already know' to prevent self-censorship
“One thing I never did, if somebody was calling to tell me something that was bothering them, that they saw an opportunity or a challenge, I never said I already know about it. Because I never wanted anybody to self-censor later.”
Insight
Blankfein: Evaluating past decisions using hindsight bias is managers' biggest fault
“And people make a mistake because the big fault of risk management or bosses or managers is they let after acquired information seep into their judgment of what they would have done at the time.”
Insight
Blankfein: Tech adoption initially inflates costs before delivering long-term efficiency
“Technology in the first instance always, Augmented our costs, never detracted from it, but along, but as we go, as we went from one you know, from one lily pad to another things got better and more efficient”
Assertion Partly supported
Blankfein: The repeal of Glass-Steagall forced Goldman Sachs to go public
“So we had to, you know, if J.P. Morgan was gonna become an advisor, we had to become a good lender and a good financier. So it meant that we had to have a bigger balance sheet. Couldn't run that on impermanent capital of a partnership. And so we had to go publ…”
Insight
Blankfein: Public markets penalize volatile earnings with lower valuation multiples
“In a private company, you care about the E, the earnings. In a public company, you care about P.E. And if you have volatile earnings, your shareholders don't like that. They reward you with a lower multiple.”
Insight
Blankfein: Off-balance-sheet vehicles lower unit revenue but boost ROE and P/E
“We shifted a lot of that to off-balance sheet vehicles, and by the way, means you have to do more of it. Because instead of earning a hundred-cent dollars, you're earning twenty-cent dollars with lower risk, and a higher P.E., and a higher R.R. Return on equit…”
Opinion
Blankfein: Goldman Sachs partnership grants a baseline presumption of intelligence
“Saying that, you know, look, I was a partner at Goldman. I'm not saying this is exclusive to Goldman. But saying your partner, at least people will, the presumption has shifted that you're not a dummy unless you prove you're a dummy, as opposed to other people…”
Insight
Blankfein: Mark-to-market accounting serves as a critical risk management early warning system
“Mark-to-market is not just a P&L system, it's a risk management system. Because we, that was our early warning that something was amiss here.”
Insight
Blankfein: Early-career crisis conduct shapes long-term reputation with future industry leaders
“Your cohort is gonna going to run for all the important institutions 35 years from now, or 30 years from now, or 20 years from now. And you're gonna going to make your reputation with those people 30 years from now Believe it or not, are gonna be how they reme…”
Insight
Blankfein: Crisis defense is the worst time to build public trust
“And when you're being defensive and people are trying to kill you, it's not the best time to try to make friends with the public.”
Insight
Blankfein: Staying understated creates severe risks for influential market players
“I think there's no, you know, being modest and understated carries a lot of disadvantages. And I think you have to explain the role you Are in the market, so that there's some appreciation of what you do.”
Insight
Blankfein: LLMs create systemic risk by removing institutional intuition and audit trails
“You know, one of the, you know, when you get, when you go into some of these large language models, you don't know the thought process. You lose intuition in these things. It used to be when I started out in the business, You know, people be shrieking each oth…”
Insight
Blankfein: Institutional risk management relies on contingency planning, not predicting the future
“Most of what we do with respect to risk is not so much predicting, it's a lot of contingency planning.”
Insight
Blankfein: Companies should prioritize board members who have survived real crises
“And that's why, I mean, my advice you know, when you pick board members, and by this a very, I'm turning something that's generic into a very narrow things, I think a good place to go is find people who've already gone through a crisis. Because to me, people w…”
Lloyd Blankfein