It is still too early for a definitive judgment on Lloyd Blankfein’s leadership of Goldman Sachs . GS 1.66%
In many ways his tenure has been a resounding success. He led the firm through the financial crisis and its aftermath more ably than many Wall Street peers.
The ultimate measure of this may be the firm’s return on equity, the most closely watched measure of a bank’s profitability. At Goldman, this ratio has been consistently above 10%, the threshold that investors generally like to see in a bank, for five of the last six years, excluding the impact of tax legislation in 2017. Morgan Stanley , by contrast, is only now approaching that level after years of restructuring.
But what sets Mr. Blankfein apart most may be his fealty to the business of trading fixed income, currencies and commodities. Annual FICC revenue across 12 top banks has declined by more than half, or around $78 billion since 2009, according to research firm Coalition. Banks across the street have pulled back from the business, but Goldman has retreated less than others.
The big debate on Wall Street always has been how much of the decline is attributable to more permanent changes, such as postcrisis financial regulation, and how much is due to more temporary factors like the economic cycle.
Mr. Blankfein has been firmly in the latter camp. He continued to argue his case as recently as last month, saying at a conference that strong global growth and the paring back of central bank stimulus could be setting the stage for an inflection point.
Whether he proves right about this may determine if he is remembered as merely a good leader or a great one.
Write to Aaron Back at aaron.back@wsj.com
Appeared in the March 12, 2018, print edition as 'Weighing The Legacy Of Blankfein.'