The Goldman Sachs Group, Inc. (GS) Barclays 21st Annual Global Financial Services Conference (Transcript)

The Goldman Sachs Group, Inc. (NYSE:GS) Barclays 21st Annual Global Financial Services Conference September 12, 2023 2:45 PM ET

Company Participants

David Solomon - Chairman & Chief Executive Officer

Conference Call Participants

Jason Goldberg - Barclays

Question-and-Answer Session

Q - Jason Goldberg

Put up the first ARS question that we're asking everyone. Very pleased to have Goldman Sachs with us continuing this afternoon’s presentation. From the company Chairman and CEO David Solomon. David, thank you for being here. Maybe the best place to start is just, you know, high level macro overview. I thought your comments in July earnings call were more constructive. And you've kind of been on more bearish side before that. So just maybe kind of what's your latest view on the macro backdrop and operating environment?

David Solomon

Sure, first of all thank you for having me. Delighted to be here. It's a kind of an annual rite of passage in the fall. I think we are constructive, the environments definitely gotten better. And it's interesting. You said, I was kind of on the bearish side, if we were sitting here a year ago, and we were looking at where inflation was what the Fed was clearly saying it was going to do. We were six months into the war in Ukraine, it was kind of hard to be optimistic. And candidly, as I talked to clients, I talked to CEOs I talked to investors, there was tremendous cautiousness, because we're really changing the environment, materially. Now, I actually think economy has been more resilient over the course of the last 12 months than we expected. I think government spending obviously has been a huge tailwind, which has helped them that in that context, to some degree, markets have been more resilient. But I think the chances of a soft landing now are materially higher. And certainly we've got inflation to a better place. Definitely in the camp, that inflation might still be a little bit sticky, and we've got more work to do, and maybe kind of stickier higher rates longer. But we're in a much, much better position, and the capital markets are also starting to open up and react a little bit more positively.

So I think it's a more constructive tone going forward. But it's, it's still an uncertain time because we haven't navigate through this. And so as an organization we stay focused on risk management, we stay focused on optimization.

Jason Goldberg

So continuing to see evidence of capital activity, and I guess, are you continuing to see evidence of capital activity in strategic dialogue picking up, maybe how our client engagements and the prospects of research and activity levels trending? And then, any comments in court of the day trading activity now that you kind of open that floor up last quarter?

David Solomon

Sure. A couple of thoughts. First of all, there's no question that the environment for capital markets activity is improving. It's still way way off, what I'll call cycle averages, but definitely improving. Just before I came up here, I met with our management, the middle their IPO, from everything I hear that's going well, we have a handful of other very significant IPOs in the market. It's been quite a while since I can say to you, we have a handful of very significant IPOs in the market. That's an improvement. But I do believe that if these go well, and it feels at the moment, like they're progressing nicely, it kind of creates a virtuous cycle of bringing more of the pent up backlog to market. So I definitely think we're seeing capital markets improvement more confidence in the capital markets.

And by the way this is not surprising. Jason when you step back. I've said, when you have a reset in capital markets like this history tells you, it takes about six quarters, to get things to kind of reset and get things reopened, what do you know, what kind of six quarters. So I think things are improving, but we're still a ways away from normalized levels, with respect to capital markets. But I, I think that trend, if the macro environment, if we're correct on the macro environment, I think that'll continue to improve through the rest of the year, and into 2024.

And we'll get back to a more normalized environment for capital markets. M&A is, it's a longer lead time. And so, you don't decide you want to do something strategic on Tuesday and do it, a week later. Last summer, M&A activity shut down, because there was enormous skepticism and concern about the economic environment. There is no question CEOs feel a lot better right now, much more leaning toward good prospects for soft landing. So it wouldn't surprise you inside our shop is more strategic dialogue going on with companies. And I do think you'll see an acceleration, of that, it just that will lag the capital markets pick up for sure.

In addition, I just say financial sponsors have really been closed, the private equity guys and the financial sponsors for the last 12 months, they haven't been selling things, they haven't been buying things, the way their business models work. And by the way, this is a huge part of investment banking activity, hard for them to make money when they don't sell anything, hard for them to make money when they don't buy anything. And so you just kind of know, that's not going to continue, forever. And as that ecosystem opens up, and I think you're starting to see signs of life there too, that puts another tailwind to capital markets, activity, and then ultimately, M&A activity.

With respect to trading, what I would say is, the activity levels have been good this quarter, but I think you're aware that we're coming off a, relatively tough comp versus the third quarter. Last year, I'd also highlight that you should, look you got to September is important, because of the seasonal slowdown. And so obviously, we have a few weeks to go and we'll see what we come out.

Jason Goldberg

Got it. Now, maybe remind us of your key areas of focus and execution priorities, and has anything changed?

David Solomon

Nothing has changed. I mean, our key area of focus, first and foremost, we're focused on continuing to grow our wallet share in our -- business, our global banking and markets franchise, franchise is performing very well. So we're really good about where the client franchise is. Feel very, very good about our leading banking franchise and our kind of top position with what we see is one other in the trading businesses broadly, and strong returns across that business through the cycle.

Second, and asset wealth management, we have two key priorities, growing management fees, which we've obviously made a lot of progress on, and also continuing to reduce the historical principal investment balance sheet, and we're continuing to make progress on that. And then obviously in the platforms continuing to bring the remaining businesses that we have in platforms to profitability. And so we're executing feel good about where we are.

Jason Goldberg

And maybe we can kind of delve into each of those segments, maybe a bit more specifically, but on global banking and markets, it uses roughly two thirds of the firm's capital, you have materially improved the return profile in recent years, maybe what are some of the key opportunities going forward? And how will you be able to maintain your market share gains?

David Solomon

Yes, we feel very good about the market share gains. There’s a lot of data on the market share gains from the work we've done. Obviously, quarter-to-quarter there can be movement around that. But we think they're broadly sustainable, and there's more room to continue to make progress. We took our top 100 focus, and we moved it to the top 150. And we continue to make progress against the top 150 clients. And there's up share there, that there's upside there that can lead to additional, wallet share for us, the financing business continues to grow. And we think we it's a little bit like a virtuous cycle, because you finance your clients more, you wind up with a bigger share of wallet. And I just think we're positioned given the scale, we've driven across this business to be a leader there. And that creates more, more of a tailwind for us. So we feel good, the returns through the cycle with the -- teams. I think we've shown that when we return to this business cycle, and we continue to be confident that we can deliver on those prospects as we move forward.

Jason Goldberg

And then lastly on wealth management, clearly a business, you've emphasized more in recent years, maybe just talk through how your business is differentiated and what gives you confidence, your ability to continue to grow and hit those targets you talked about and maybe what opportunities you see as most impactful.

David Solomon

Sure, and we had -- we add five asset management businesses and a wealth business we put together, whenever you do that, there's a process around that. We've made a lot of progress, particularly in the last 12 months, on the process of getting that organized. We think it's a super unique platform where we're one of the top asset managers in the world, the 56th largest active asset manager in the world. We supervise $2.7 trillion of assets. We have a trillion dollars of wealth assets on the platform, from our predominantly our ultrahigh net worth business. We have about $450 billion of alternatives.

I think one of the things that makes the platform unique is the scale and global nature of it, and the fact that we have really strong positions across the whole ecosystem of both public markets and private markets. So a leading liquidity platform, a very, very top fixed income platform, a top 10 active equity platform, and a top five alternatives platform, and our ability to tailor solutions for clients wildly in a way that's differentiated, given the breadth and the scope of what we have, we think is very compelling. And we're hearing that from clients.

We recently won, and we announced a very, very significant OCIO mandate. That was quite significant. We're pitching for others. We think we're a leader in that business. We think there's opportunity there on our fundraising target that we had set out a few years ago where $204 billion of alternatives and continuing to make progress on that, that doesn't stop when we hit our $225 billion target. But we're I, we're getting there. And we continue to grow our management fees. I look back, over the course of the last five years and see a real move, and the growth of our management sees, obviously, that won't stop there.

And then our investor day mark, not been laid out, a growth trajectory for that business, you set a margin target. We continue to make progress on that margin target. We said at the time, that wasn't an aspirational margin target. But we thought it was a good place to start. And of course we think we've had the right strategy and reducing legacy balance sheet. But we get that historical principle investments down to $15 billion by the end of 24. And then, generally zero by the end of 26. I think we're on track, and we'll continue to report. We're actively trying to continue to sell those assets. It's complicated environment. With respect to the commercial real estate and stuff we have, I think, again, this quarter, you will see some impairments and marks in commercial real estate, but to a lesser degree than we saw in the second quarter.

Jason Goldberg

A lot in there, you talked about settling down historical principle investments, sub 15 billion by the end of next year. If you look, I think your SCP came down 80 basis points in the most recent CIFAR [Ph] coming into effect October one. I suspect that contributed to it. You're going to hit your -- you’re kind of re-affirm your targets, despite the fact the environment it's probably more challenging to sell assets. [Indiscernible] I'm going to talk to the ability to kind of when you think you can get to kind of zero and just how does that drive the lower SEB?

David Solomon

Well, there's no question that that that our performance around the SEB was impacted by the actions we've taken was. This was clearly the right strategic decision for the firm. Going back, four plus years, when we started wrestling with this. I, I do think if you think about the firm and the firm's balance sheet, and the firm continued on the strategy, which, by the way, with the regulatory world was not the right strategy. If you consider it on the strategy, and had, the size balance sheet, we had kind of coming out of the last decade, we've been in a very different position than we are today.

So we diligently worked on selling stuff down, we believe that we have a responsibility to make the right prudent decisions, from a value perspective, but also releasing capital is very, very important in this. So we're moving with haste, we've made a lot of progress, we'll give you an update at the next earnings call, as we do every quarter. But we feel very good about what we set out that we can be down to $15 billion at the end of 24. And, generally negligible by the end of 26. And as we do that, it's more capital, in that in that context.

Jason Goldberg

And then you headed off on other questions. But, I was going to ask you about the mid-20s, kind of margin for AWM does seem a little bit low relative to kind of the other asset managers. Ultimately where do you think you can drive that business towards?

David Solomon

Well, I think it was appropriate, given where we weren't where we were starting to set that margin, but we were very, very thoughtful. And the language used to say, that's not our aspiration. As we make progress, and we're making a lot of progress in that, we'll give you an update as to what you can expect. But at this point, I'm not, I'm not going farther than what Mark said publicly.

Jason Goldberg

And then I guess where are you in terms of putting all those businesses together? Are they….

David Solomon

We’ve made a lot of progress. And these businesses they have organized our platform, I think we’ve got the right leadership. Yes, there’s been some people movement around that. It's been the appropriate thing to do. Some of its been at are what our direction a good amount of it some of it's been in our direction and so we needed whenever you put businesses together there's going to be disruption and there's going to be volatility. And I just I just how like the firm has done this. If you go back and you’re a student at Goldman Sachs, when Goldman Sachs put fixed income and J. Aron together in the 1990s there was all the volatility on getting that together, some leadership leaving, some leadership elevated and [Indiscernible] for thick inequities together in the early 2000s. There was a lot of added, there was some very important partners that decided they didn't have the right seat at the table and they decided to move on.

This is the path we've been down before and here we have 25 businesses together and so there was there was a movement but we've done that hard work over the last three years, we're in a really good place with it and we're extremely excited about the prospects for this platform. It's a powerful platform. We think we'll well positioned. And one of the things that gives us such confidence is a feedback from our clients about our offering the mandates for competing for and winning gives us a lot of comfort that we have something unique that can be powerful and can grow over time and we're very focused on that. We think it strengthens Goldman Sachs. We think it's something we're good at. We've had good performance in our asset management business over a long period of time. We believe, we have a performance culture. We're going to continue to invest in that performance culture and we'll also continue to invest in a culture of client service in that business. And I think if you perform and have a great client experience you’ll do well in those businesses.

Jason Goldberg

And we will -- lastly on AWM I think it was a couple weeks ago you announced the sale of personal financial management to creative planning. Just maybe how this is kind of fit into your role at AWM strategy?

David Solomon

So we made a decision when we looked at the high net worth strategy that we were better to take the investment that would be necessary to continue to put that and really allocate it to continuing to grow our ultra-high net worth strategy. We're picking up the ultra-high net worth strategy has been growing directly it's a big business we're clearly there's room for us to continue to grow around the world. And we have one of our themes just in our strategy over the last 18 months is simplification and focus and this was an opportunity to simplify that strategy and focus, so we decided that was the, that was the appropriate decision when the deal closes something this fall will book again, and we'll then focus all of these sources in our attention to growing the ultra-high net worth business.

Now we have an ability to access high net worth dual relationships with RIAs. We continue to service RIAs very broadly across a broad platform and we do think that's an opportunity to bring more assets into our asset management business. We also think this is sure for us to have our ultra-high net worth business and with the RIAs they have no conflicts of having our own RIA platform inside. And so we think this is the right strategic move and it creates focus for us and ultra-high network.

Jason Goldberg

Got it. And maybe shifting gears to the consumer side of the house. Clearly veneering your ambitions over last few quarters just maybe any update you provide us in terms of how that process is going GreenSky you're obviously taking a look at, and just maybe your consumer strategy more broadly particularly credit cards.

David Solomon

Yes, so with respect to GreenSky, we transmit it to the market that we're running a process or not I don't have anything other to report other than when we reach a conclusion we'll report, but we feel good about what we are in that process and more to come on that. On our goal as I stated is to bring these to bring the rest of the platform across profitability we're making progress. We’ve narrowed the focus. We've executed on a bunch of things to narrow the focus, so we're operating the card platforms you probably saw we made an important hire with a lot of experience gentlemen in Bill Johnson to help us continue to drive the focus to profitability on those and we'll continue to evaluate as we go forward. But that focus has gotten a lot narrower and a lot worse – and feel good about the progress we've made.

Jason Goldberg

And I think you were talking about pre-tax break even by 2025…

David Solomon

We'll continue to drive to profitability as quickly as we can on this platform.

Jason Goldberg

Got it. Possibly in a game obviously I’ll get quite a lot of our summer rating, maybe if you could kind of we'll put up the next ARS question but can you maybe just talk about your thought of the proposal impact on Goldman, what are you doing to prepare?

David Solomon

Yes. So I mean it's a big rule of proposal I'd say the most significant change to the regulatory, the regulatory rules since the financial crisis and Dodd-Frank. If you go back to Dodd-Frank I think it's important to recognize that coming out of Dodd-Frank the largest financial institutions materially increase the capital I think 2X plus, materially increase their liquidity, materially decrease their leverage. The largest financial institutions go through a rigorous stress test every year. The largest financial institutions also have been through some real world stress tests over the course of the last five years and have performed well and have really been very stable and very constructive at difficult times. And so I think the large financial institutions are in very good shape.

So you have to, I think when you look at this, you have to ask the question, what are we trying to do? What are we trying to accomplish? And if the answer to that is to make the system more safe and sound, it's not clear that more capital is the best answer to that. And there are trade-offs. And so is this the best way to do it, I think is a reasonable question. And so I then think you've got to step back and say, okay that's a complex question to answer. But what do we know based on looking at the proposal?

Well, there are three things that I believe based on the proposal that would absolutely be true if it went into place. The first is the cost of credit would go up for big companies all the way down to small businesses. The second is that the U.S. competitiveness in capital markets would decrease. And the third is that more activity would be pushed out of the regulated part of the banking system into the unregulated or shadow system. And so, if you look at that, our view is these capital rules go too far. Of course, we believe and want a safe and sound system. But you have to ask, is this doing more damage to the system than providing benefit?

And so, we do not think this proposal, as put forward, is good for economic growth and competitiveness in the United States. We'll comment during the comment period and we'll see how this progresses. I know a number of other people here have commented, on impact as put forward for us. These rules, if they went in place as put forward, would increase our capital by slightly more than 25%.

Jason Goldberg

Capital or RWA?

David Solomon

Capital.

Jason Goldberg

By 25%

David Solomon

More than 25%. But I'd also highlight, as you know, and we were actually talking, before, the industry has been very nimble at adapting to the rule set. And so as the rule set comes forward, as it evolves, the industry will adapt and the markets will adapt. I think the question we really have to answer, is this good for the system? Is this good for U.S. competitiveness? Are we doing the right thing? Is this enhancing safety and soundness? More capital does not necessarily enhance safety and soundness versus creating other friction.

Jason Goldberg

I guess in a hypothetical world, if the proposal goes through as is, what is Goldman doing? I imagine sitting still isn't an option. Do you see kind of some of the benefits from either? Is it shrinking RWAs? Is it exiting businesses? Is it charging more? Just, how do you go about managing that?

David Solomon

Yes, we adapt. I mean, it's just I was talking before. We are pretty good at adapting to whatever the rule set is. And there have been other rules that have been put forward where people have flipped out. The industry adapts and it comes in all different forms. You do certain things differently or you don't do certain things or you charge certain services. There are certain parts of this that I think can migrate stuff to parts of the unregulated system. By the way, we participate as an asset manager in parts of the unregulated system. We have a huge private credit platform. So we can benefit from some of that, too.

But on the other hand, there are also certain parts of it that are hard to push into the unregulated system. Prime is a very, very important part of the economic engine that provides liquidity to markets. And that's not easy, to push someplace else. So there'll be there'll be an adaptation, there'll be changes, there'll be changes in pricing. But for the moment, I'm more focused. We're obviously doing all the work that you would expect us to do on top of it. We're all over it. But I'm more focused on at the moment, we're in a comment period. I don't think these rules make sense. We need to comment. We need to see what we can do to make these.

Jason Goldberg

I guess, out of curiosity, where do you see maybe the greatest chance of having success in the market?

David Solomon

I'm not going to offer a point of view on the record on that. I think there's a lot here that needs to be discussed. And by the way, you're hearing out of Washington, there are lots of different points of view. There are different points of view on the Fed. We just saw Bill Dudley yesterday, the former chair of the New York Fed, put out an opinion piece stating his view. There are lots of different points of view on this. So I think this is going to be an interesting process. And it's speculating as to how this all plays out. We have to be prepared. We're doing what we're supposed to do, but it's early to speculate.

Jason Goldberg

That's fair. Why don't we put up the next ARS question in that – is that the next one, I had a different one. But as the audience answers that, I'll continue. With the proposal, I guess, how does it influence your thinking about capital return and maybe through the recycle return targets?

David Solomon

Yes, so with respect to capital, we view ourselves as stewards of the capital that's granted to us at all times. And through this transition, we certainly feel we have an enormous responsibility to continue to steward that capital. We've been very committed to capital return and making capital return more consistent. It's one of the reasons why we've tripled our dividend over the course of the period of time from 2019 to now. And we just raised our dividend by another 10%. So we continue to be committed to that consistent capital return. Obviously, at this moment in time, we said at the end of the second quarter and the third quarter, we would increase our buybacks from second quarter levels. As we move forward from here, we will continue to do buybacks, but at a lower level, given the uncertainty. And we'll obviously evaluate and be nimble and flexible and see as we learn more as we go forward from here.

Jason Goldberg

And I guess one more on that topic. Well, let's go to the ARS question. But we can stick with that. Just what can Goldman do to most improve its valuation? Building consistent return revenue stream, which is kind of what you talked about a lot of. But maybe put up the next one. Thoughts on through the cycle targets.

David Solomon

You asked about targets. It's too early to talk about targets given where the world is. So at a point in time, we have more clarity. If something needs to change, we'll certainly talk about it. But as we sit today, we really believe the two primary businesses that are driving the firm are mid-teens through the cycle. Obviously, the asset wealth management business will be mid-teens very, very consistently with less volatility when we get the balance sheet down. The markets business will be a volatile business, but we think we've really upgraded the returns. And we believe in the current construct, pre the world, but mid-teens through the cycle. And so it's too early to comment on what the implications of this will be, but we'll watch it. And we'll obviously communicate at the appropriate time if there is a change. Not clear there would be.

Jason Goldberg

Fair enough. There's been obviously a lot of headlines on Goldman Sachs of late. Some of them you addressed last week in an interview, so I'm not going to rehash that. But there's certainly been also outside media attention around several kind of senior level departures. Maybe just kind of from your seat, how would you describe the firm's culture, talent? Maybe talk to the attrition.

David Solomon

Sure. Sure. And I'd certainly agree there's been a lot of headlines and there's been a lot of noise. Sometimes I'm amazed at the attention that we get from a media perspective. Here are a couple of things that I'd certainly offer. First of all, the culture of the firm is incredibly important and the partnership of the culture I think is a real differentiator. It's unique to Goldman Sachs. It's served the firm well. It allows us to serve our clients well. It allows us to attract and retain really extraordinary people. It's unique, it's different, but I wouldn't have it any other way. I'm glad we have it. And I think it's a huge beneficiary to the firm. There's nothing that's going on in the context of partner transitions that's different than any other cycle. We said at Investor Day back in February that the last two year cycle was the lowest partner transition cycle over the course of the last decade. Let's go back to 2014, to have a higher transition than what we had in the 2020, 2022 period. And if you look right now at the beginning of cycle because we made partners last fall, this cycle is tracking within the band of what normal is.

We run a partnership certain size. We want to elect 80 partners every two years. That means 80 partners have to leave every two years. And obviously every time a partner leaves, we get press articles and attention, but there's nothing that's happening that's different than what we'd expect. And part of the rejuvenation of the talent pool is people want opportunities to step up. This is part of the life cycle of Goldman Sachs.

Jason Goldberg

And then I guess when I look at Goldman's valuation, I think it's one, one times book, nine times earnings. What do you think needs to happen to trigger a re-rating and what gives you confidence you'll get there?

David Solomon

Well, we're going to continue to simplify the story. We're going to continue to execute on what we said that we're going to do around our core businesses. As we make progress in the asset management business, that will grow, that will give more ballast and more consistently. Hopefully that will help.

As people continue to see that our markets and banking, our banking and markets business can perform through the cycle, hopefully that will help. But I'd highlight that we've grown the earnings materially, we've grown the book value materially, and we've grown the dividend materially. We're going to continue to do that. We've done that in a lot of different environments over long periods of time. And so, do I wish the multiple was higher? Yes. Do I think if we continue to execute on a simpler core story with multiple at some point go higher, I'd like to think so, but it's really my job to guess on when the multiple moves. It's my job to execute and do what's right for shareholders with our broad leadership team. We're very focused on that. We're going to continue to execute. We think we're making a lot of progress and we feel very good about where we are.

Now, one of the things that would help that obviously is a better operating environment, and certainly this has not been a great operating environment for the last 12 months. I mean, it's not surprising that an institution that's heavily reliant on eminent capital markets trading has a bunch, even though we're reducing of private equity, growth equity, and real estate in this balance sheet has had some earnings headwinds in this environment, but the environment's getting better. That's not the normal through the cycle environment. And I think if we continue to execute on the core things I've highlighted, we've been sitting here, we'll make progress. And over time, investors will reward us as they see appropriate.

Jason Goldberg

Right. I guess, I mean, is it safe to kind of view 2023 as a kind of epic transition year to kind of get to some of those good things you talked about, clearly felt like the investment banking environment is getting better. It sounds like the consumer business should be left for drag. New commercial real estate sounds like a lot of the markdowns that we've done this year. As you kind of think about 2024, it feels like we're moving closer-ish to a mid-teens type of operating environment.

David Solomon

Yes. I mean, I think 2024 should be a better year for sure. I think there are two things going on in 2023. One is we made a strategic pivot with a part of our business and we've been executing on it. This is the narrowing of the consumer and there's some friction with that. And we're working through that and we've made a lot of progress this year. I think we've executed well on what we're doing. We continue to have more work to do and we're executing. But the second part is not a transition. The second part is it's a pretty lousy environment for our business. And that had a greater impact, a greater impact on the performance of the firm over the course of the last year than the consumer business.

And so we're going to continue to execute on the transition, as we said, in the consumer business. And we're going to continue to execute on our core strategy and the environment will get better as the environment gets better. And we will benefit from that. We definitely are correlated to an improvement environment.

Jason Goldberg

And just as a point of follow up, I got a text commercial real estate impairments. I guess there are 400 ish million last quarter should be less this quarter.

David Solomon

Yes, I mean, I'll just repeat what I said because my words were purposeful. We're still going to have some markdowns and some impairments from commercial real estate, but it'll be less than last quarter.

Jason Goldberg

Right. All right. And I guess we're, I guess, with kind of traditional bank lending, you kind of booked the reserves and a lot recognized over time and mark to market world, you recognize these losses, obviously sooner, kind of where do you think you are in terms of marking the CRE book?

David Solomon

One, you tell me what the environment's going to be. If, if we're right about the soft landing, we've come a long way. If, if we're long and we wind up on a recession for anybody that, that still owns, that, owns commercial real estate, probably more headwinds, however, we'll highlight we're continuing to reduce what we have actively. And so we continue to make progress on it.

Jason Goldberg

And maybe, the help with the audience is….

David Solomon

This is all you understand. This is all, this is mostly what we're talking about here is latency alternatives investments. Many of which have been made over the last decade, that we're now moving out of the historical principle investment and reducing, that strategy.

Jason Goldberg

Right, right. You mentioned before about the ability to kind of adapt. It's Goldman. I think we did it when SLR first came out when SACR kind of kind of everything, everyone's kind of free data first, and then the firm manager, you just talk to kind of how you go about kind of tackling these new proposals and maybe think about it kind of wants to finalize, just kind of what are some levers you have to do?

David Solomon

Well, I think we want a pretty nimble organization. We've got a lot of really, really smart people and they're zealously focused on our clients, but we also have a lot of people, in the organization that are zealously focused on optimizing and helping us run Goldman Sachs as efficiently as we can. I think one of the things about our business is you've got variables that you can't control like the environment. And then as there are rules or there are things that you can't control, make choices on, you adapt, you adjust and you evolve.

And so I think we're pretty good at that. It doesn't happen instantaneously, but we've got a long track record of doing it with all sorts of change, all sorts of rules, all sorts of evolution. And the firm continues to manage to grow, to grow its earnings, to grow its position. So, I'm very confident that no matter what's thrown at us in this context, we'll continue to evolve and adapt and we'll do what we have to do to make the right decisions for our shareholders. We're very shareholder focused and we continue to do what's right for our shareholders.

Jason Goldberg

And one piece that I would like to ask questions about is, in your kind of looking at GreenSky, you're committed to deposit taking franchise with Marcus, I'd imagine, where does kind of credit card fit in?

David Solomon

Well, remember, and I've said this publicly, these credit card platforms are partnerships that are longer-term contracts with our clients. At the moment, we're in those contracts, we're executing, we're making it better. There's a broader strategic question about the long-term fit. We haven't said a lot about that, but we clearly don't have an at-scale business. We're operating what we have efficiently. We've said we're not going to add to it. We're going to try to operate it more efficiently and improve it, and we'll continue to communicate around it as decisions.

Jason Goldberg

David, thank you for your time.

David Solomon

Thank you, my pleasure.

Jason Goldberg

Thank you, David.