The Panic of 2008 was notable for its absence of heroes. Unlike the crisis that hit American finance 101 years earlier with the collapse of the unregulated trust companies, there was no J.P. Morgan brandishing equal parts capital, moral suasion and authoritarian might to force the industry back on its feet.
In the current panic, villains have been identified in great abundance. That’s made it foolhardy – even dangerous – for any Wall Street leader to poke his head above the parapet to defend the financial industry while calling for the eradication of its excesses. Now, though, Lloyd Blankfein, the chief executive of Goldman Sachs, appears to be doing just that.
Along with Jamie Dimon - who now runs the company Morgan founded - and, across the Atlantic, Deutsche Bank’s Josef Ackermann, Blankfein is emerging as an influential voice shaping Wall Street’s future.
Look no further than the speech he gave on Tuesday in Washington. In the face of taxpaying hecklers unfurling a banner beside him calling for their money back, Blankfein exhibited the contrition much of his industry has arrogantly avoided. After his detractors were escorted away, Blankfein attempted to articulate their rage and even connect with it.
He acknowledged the shoddy risk management that had infected finance. He laid out the basic principles that should underp in bank compensation. He rightly criticised lawmakers' efforts to restrict visas for skilled foreign workers. Not for the first time, he robustly defended mark-to-market accounting. And he accepted that hedge fund and private equity firms may need to be more heavily regulated.
Along the way, he sounded a good bit more statesmanlike than, say, Wells Fargo’s chairman, who called government attempts to help banks "asinine".
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Even so, Blankfein isn't an obvious leader of the swaggering Wall Street class. He’s also extremely wealthy, making him a soft target for criticism from the hurting masses. Unlike the rotund Morgan, whose ever-present cane and a bad case of rosacea gave him a frightful visage Blankfein is a jocular, unassuming man with a frame that suggests the high school chess club rather than varsity lacrosse.
Goldman, too, is an unlikely breeding ground for an industry figurehead. It eschews the star system, instead emphasising a collegiate approach. And its role as a conveyor belt of talent to the previous US administration – and to the board of accident-prone Citigroup – would seem to give it reason to keep its head down.
So Blankfein’s tentative steps into the open may yet backfire. But as an experienced trader, he has surely calculated the risks and decided that it would be better to risk public embarrassment than hide in the bunker while his industry is dismantled.
