As internal dissatisfaction intensifies, John Waldron, Goldman Sachs' President and COO and the right-hand man to CEO David Solomon, is now in a predicament of choosing sides. If Waldron breaks ranks, Solomon may find himself under siege from all fronts.
Media reports suggest that there's growing dissent within Goldman Sachs against Solomon, creating awkward situations for top executives, especially Waldron. As the discontentment with Solomon's leadership team has spread internally this year, colleagues have been pressuring Waldron to either distance himself and garner support from executives against Solomon or risk being perceived as another, softer version of Solomon.
Robert Mass, a former Goldman Sachs partner who worked there for 27 years, highlighted the choices facing Waldron. As the second-in-command, he must decide whether to stand out or support the many dissenters.
Solomon, in recent years, aggressively expanded Goldman's consumer banking operations. However, this move led to losses of over $3 billion from early 2020 to September of the same year. This significant loss in the consumer lending sector has made internal dissatisfaction with Solomon increasingly public.
Last month, Goldman's Q2 financial report revealed that profits took a hit due to the sale of some loans from its consumer banking sector, Marcus. The bank recognized a $504 million goodwill impairment relating to the consumer platform division. Goldman is exiting the credit card business and selling home improvement loan company GreenSky, leaving Marcus savings accounts as its primary consumer offering.
Critics argue that the main problem at Goldman isn't necessarily poor performance, but Solomon's abrasive leadership, unpopular changes, and the ambitious expansion into consumer banking. This aggressive push into consumer lending, which came at great cost, ended in failure, affecting the company's overall profit and employee salaries.
Media reports have noted that Waldron and Solomon have been in sync on the company's strategic transformations. While Solomon has consistently brushed off his critics, Waldron has played the role of diplomat. Over the past year, he has been open to internal criticism, acknowledging setbacks, but never publicly betraying Solomon.
Having served the Murdoch family for many years as a banker, Waldron is familiar with the pitfalls of power struggles. Goldman's executives have been analyzing every move Waldron makes, watching for signs of tension or distance between him and Solomon.
Last month, Waldron's comments ignited speculation when he mentioned, in a discussion about current business challenges, that anyone running the company in roughly two years might lead a "cleaner" organization. This statement caused a stir at Goldman, with bankers wondering if he was hinting at planned transitions of leadership or, at the least, hinting at his own readiness to step up.
Goldman's spokesperson, Tony Fratto, later clarified that Waldron was discussing when Goldman might see more stable returns, emphasizing that the leadership team is "focused on executing our strategy and business performance, not on speculation."
Nevertheless, there are increasing signs of mounting discontent within Goldman, making Solomon's position more precarious.
This past June, BlackRock CEO Larry Fink, the second-largest shareholder of Goldman Sachs, casually mentioned on TV the apparent divisions within Goldman. Last month, reports suggested that following the major retreat from consumer lending, Solomon is heavily relying on asset management. However, this key business sector has recently seen a wave of executive departures.
Earlier this month, media claimed that due to a plummeting stock price, which caused him a paper loss of up to $50 million, Goldman's former CEO Lloyd Blankfein called Solomon in June to express his dissatisfaction. Blankfein reportedly offered advice and even suggested he could return to the company to help, an offer that Solomon declined.
This past Monday, Blankfein clarified to the media that he expressed his willingness to help and support Solomon, but never mentioned a return to Goldman.
