Business

Wachovia's CEO is part of Goldman tradition

Goldman Sachs Group Inc., the alma mater of new Wachovia Corp. chief Bob Steel, has a long-held reputation for churning out men who go on to run the world.

Many alumni of the venerable New York investment bank are in prominent government positions, including Treasury Secretary Henry Paulson, New Jersey Gov. Jon Corzine and White House chief of staff Joshua Bolten. Steel himself comes to Wachovia from a public-sector job at the Treasury Department; before that, he spent three decades at Goldman.

The Goldman diaspora comprises both Republicans and Democrats, and its admirers appreciate the idea of bringing Wall Street efficiency to Washington's sense of duty. Others wonder if Goldman alums should be regulating the industries where they used to make a living. “The invisible government of Goldman,” economist Ben Stein called it in a December column in the New York Times.

“It has never been clear to me exactly why its people are considered rocket scientists in any other area than making money,” he added.

Goldman's history of producing powerful government leaders goes back decades. Sidney Weinberg, a longtime senior partner who was hired at Goldman as a janitor's assistant in 1907, preached a public-service gospel to his own employees and others. According to Lisa Endlich's 1999 book, “Goldman Sachs: The Culture of Success,” Weinberg served as vice chairman of the federal war production board in World War II and the Korean War. He acted as a one-man corporate headhunter for presidents Roosevelt, Truman and Eisenhower, recruiting – and, when necessary, bullying – business leaders to volunteer their time and expertise for the government during wartime. When business leaders tried to beg off, Weinberg would ask the president to intervene.

“He soon became known as the ‘Body Snatcher,'” Endlich wrote. “…By all accounts Weinberg's recruitment efforts were very successful.”

Since then, Goldman alums have continued to influence foreign and domestic policy. Robert Rubin, now a leader at Citigroup Inc., left a long career at Goldman to join the Clinton Administration in 1993, leading the newly created National Economic Council. He then served as secretary of the treasury from 1995 to 1999. Stephen Friedman, a Goldman contemporary of Rubin's, was appointed board chairman of the Federal Reserve Bank of New York for 2008.

John Whitehead, who spent 38 years at Goldman, has spent another 23 in the public sector. He left Goldman in 1985 to serve as Ronald Reagan's deputy secretary of state, crafting U.S. relations with Eastern Europe and the U.N. After the Sept. 11 terrorist attacks, he helped create the Lower Manhattan Development Corp. to rebuild the city's economy. In 2005, he got into a public tiff with Eliot Spitzer after saying that the then-New York attorney general (and now disgraced governor) was reckless in his accusations against business leaders.

There are still ties that bind some members of the Goldman brotherhood: Corzine brought a coterie of Goldman veterans with him when he became governor of New Jersey in 2006, installing them to run the state Treasury, Office of Public Finance, and Schools Development Authority. Steel, the new Wachovia CEO, considers Treasury Secretary Paulson a mentor from their time together at Goldman and the Treasury; both helped craft the Federal Reserve's bailout of Bear Stearns.

Not that the fraternity is always collegial: Paulson helped force Corzine out of his position as Goldman's co-CEO in 1999, then took over the top job.

For Steel, who was hired as Wachovia's new CEO on Wednesday evening, his dual background in business and government helped him win the job. The Charlotte bank faces troubles with both its financial statements and regulators.

“I think of myself as a business person first, who's had experience in public policy,” Steel said this week, pointing out that he spent almost 30 years at Goldman and less than two at the Treasury.

Steel has said that he intended to leave the Treasury at the end of President Bush's term.

“My plan was to leave January 20, 2009, at noon,” Steel said this week. “I'd booked a flight on the 1 o'clock shuttle.”

Goldman Sachs Group Inc., the alma mater of new Wachovia Corp. chief Bob Steel, has a long-held reputation for churning out men who go on to run the world.

Many alumni of the venerable New York investment bank are in prominent government positions, including Treasury Secretary Henry Paulson, New Jersey Gov. Jon Corzine and White House chief of staff Joshua Bolten. Steel himself comes to Wachovia from a public-sector job at the Treasury Department; before that, he spent three decades at Goldman.

The Goldman diaspora comprises both Republicans and Democrats, and its admirers appreciate the idea of bringing Wall Street efficiency to Washington's sense of duty. Others wonder if Goldman alums should be regulating the industries where they used to make a living. “The invisible government of Goldman,” economist Ben Stein called it in a December column in the New York Times.

“It has never been clear to me exactly why its people are considered rocket scientists in any other area than making money,” he added.

Goldman's history of producing powerful government leaders goes back decades. Sidney Weinberg, a longtime senior partner who was hired at Goldman as a janitor's assistant in 1907, preached a public-service gospel to his own employees and others. According to Lisa Endlich's 1999 book, “Goldman Sachs: The Culture of Success,” Weinberg served as vice chairman of the federal war production board in World War II and the Korean War. He acted as a one-man corporate headhunter for presidents Roosevelt, Truman and Eisenhower, recruiting – and, when necessary, bullying – business leaders to volunteer their time and expertise for the government during wartime. When business leaders tried to beg off, Weinberg would ask the president to intervene.

“He soon became known as the ‘Body Snatcher,'” Endlich wrote. “…By all accounts Weinberg's recruitment efforts were very successful.”

Since then, Goldman alums have continued to influence foreign and domestic policy. Robert Rubin, now a leader at Citigroup Inc., left a long career at Goldman to join the Clinton Administration in 1993, leading the newly created National Economic Council. He then served as secretary of the treasury from 1995 to 1999. Stephen Friedman, a Goldman contemporary of Rubin's, was appointed board chairman of the Federal Reserve Bank of New York for 2008.

John Whitehead, who spent 38 years at Goldman, has spent another 23 in the public sector. He left Goldman in 1985 to serve as Ronald Reagan's deputy secretary of state, crafting U.S. relations with Eastern Europe and the U.N. After the Sept. 11 terrorist attacks, he helped create the Lower Manhattan Development Corp. to rebuild the city's economy. In 2005, he got into a public tiff with Eliot Spitzer after saying that the then-New York attorney general (and now disgraced governor) was reckless in his accusations against business leaders.

There are still ties that bind some members of the Goldman brotherhood: Corzine brought a coterie of Goldman veterans with him when he became governor of New Jersey in 2006, installing them to run the state Treasury, Office of Public Finance, and Schools Development Authority. Steel, the new Wachovia CEO, considers Treasury Secretary Paulson a mentor from their time together at Goldman and the Treasury; both helped craft the Federal Reserve's bailout of Bear Stearns.

Not that the fraternity is always collegial: Paulson helped force Corzine out of his position as Goldman's co-CEO in 1999, then took over the top job.

For Steel, who was hired as Wachovia's new CEO on Wednesday evening, his dual background in business and government helped him win the job. The Charlotte bank faces troubles with both its financial statements and regulators.

“I think of myself as a business person first, who's had experience in public policy,” Steel said this week, pointing out that he spent almost 30 years at Goldman and less than two at the Treasury.

Steel has said that he intended to leave the Treasury at the end of President Bush's term.

“My plan was to leave January 20, 2009, at noon,” Steel said this week. “I'd booked a flight on the 1 o'clock shuttle.”

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