An inside look at the financial crisis

Heading Goldman Sachs in 2008, Lloyd Blankfein narrates how the bank navigated the crisis

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GOLDMAN SACHS IS one of the few investment banks that stood out at the time of the financial crisis of 2008. Much of this resilience can be attributed to Lloyd Blankfein, who was heading the bank at that time. Streetwise: Getting to and through Goldman Sachs is his story. Blankfein takes readers through the important stages of his life with a distinct sense of humour. Like when he was asked by CNBC of being worried about angry mobs storming his house, his reply was that he had a doormat.

His life story is not very different from other people who made it big from rather modest beginnings. Starting from scratch, so to say, he managed a seat in Harvard from where he went on to work with JAron, which was a commodity trading firm. His transition to Goldman Sachs happened when J Aron was acquired by GS. Blankfein describes the extremely illuminating hierarchy of prestige on Wall Street, which Goldman Sachs also followed. Investment bankers sit highest in the food chain, followed by traders.

Within traders, equity traders are higher placed than those dealing in fixed income. Within fixed income, longer duration bond traders were higher in pecking order than short-term traders dealing with the money market. But all these were more important than currency or commodity traders. Also, there was a prestige gap between traders who took risks and sales people who brought in business. It would be interesting to see if such hierarchies exist in broking houses and banks in the Indian context.