God’s work, bonuses and meritocracy

blankfFT’s person of the year. And the winner is… Lloyd Blankfein: figlio di un postino, proveniente da una famiglia emigrata nel Bronx dall’Est Europa a fine XIX secolo. La scelta del Financial Times sarà anche opinabile, inopportuna e disallineata allo Zeitgeist anti-finanza, ma alcuni tratti della biografia di Blankfein costituiscono un encomiabile esempio di meritocrazia à l’ameicainne, il miglior dono che una società possa ricevere e dare.

Mr Blankfein was born in 1954 to Seymour Blankfein, a postal clerk in the Bronx. The Blankfein family had emigrated to the US from eastern Europe during the 1880s and had at first prospered in the New York garment industry, but then suffered during the Great Depression.

His parents moved to East New York, now a bleak and run-down area of Brooklyn, and lived in the Linden Houses, a public housing project. Mr Blankfein attended schools including the Thomas Jefferson High School, where he gained entry to – and financial aid from – Harvard.

One formative experience was his discovery that, when his father retired from the US Postal Service to Florida, his place was taken by a sorting machine. Mr Blankfein was afterwards haunted by the image of his father working hard at a job that had already become redundant.

His background was not wholly unusual at Goldman. It was founded by Marcus Goldman in 1869 as a commercial paper dealer, and Charles Ellis records in The Partnership, a history of Goldman, that Sidney Weinberg, its most influential early partner, rode the New York subway and used to say proudly: “I’m just a Brooklyn boy from [Public School] 13.”

After attending Harvard and Harvard Law School, Mr Blankfein got his first job at Donovan, Leisure, Newton & Irvine, a law firm founded by an Anglophile who instituted a tradition of serving tea and biscuits every afternoon. After a four-year spell there (including two years in Los Angeles advising Hollywood companies on tax) he grew interested in finance.

Goldman and Morgan Stanley turned him down when he applied to become an investment banker but he found a way in through the back door when he was instead recruited by J. Aron, a commodities trading firm. By the time he joined in 1982, Goldman had acquired J. Aron.

Mr Blankfein ascended the trading side of Goldman as it contributed an ever greater share of revenues, becoming chief executive in 2006, when Hank Paulson was appointed Treasury secretary. By then, Mr Blankfein was arguing for Goldman blurring the boundaries between its investing, advising and trading sides.

The bank went in the direction that he wanted and profited hugely from it: by 2007, Goldman’s net revenues had reached $46bn, of which $31bn came from trading and investing its own capital, and Mr Blankfein’s compensation was $54m. Becoming a Goldman “partner” – one of its 400 senior managing directors – had become the most reliable route to great wealth on Wall Street.

Mr Blankfein is not known for obvious extravagance. Most of his wealth is tied up in Goldman shares – his holding is currently worth about $615m – although he lives in a $26m apartment in 15 Central Park West, an apartment building favoured by Wall Street figures. He also owns a house in Sagaponack in the Hamptons, which he bought in 1995.

He has few outside interests, but he reads a lot – he majored in history at Harvard and remains a history buff – and is a keen judge for the Financial Times and Goldman Sachs Business Book of the Year Award. He swims and runs to keep in shape, although his weight fluctuates.

He devotes some time to philanthropy, including chairing a taskforce at Harvard on financial aid. “He has been an insightful voice on what financial aid means. His education was significant in his life,” says Drew Gilpin Faust, Harvard’s president.

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