THE BLOG

Let The Lloyd Blankfein Resignation Talks Begin

07/06/2010 05:12 am ET | Updated May 25, 2011

Not because he is directly responsible for the behavior that led to the fraud charge, and not because we find the evidence that the firm committed fraud persuasive (we don't).

Simply because Blankfein now embodies Goldman Sachs during one of the worst periods in the firm's history with respect to reputational damage. When the public sees Blankfein these days, they think "that's the guy who runs that firm that made billions while the rest of the country collapsed." And, understandably, the public's not happy about it.

The SEC understands this. As a result, we think the SEC might insist on Blankfein's resignation as part of a settlement deal. It will be important for the SEC to make it seem to the public that Goldman is acknowledging that it behaved abominably and that the fraud charge resulted in major changes to the firm. And there's no better way to illustrate that than sacking the guy at the top.

Even if the SEC doesn't insist on Blankfein's ouster, Goldman itself may decide that they best way to get a fresh start is to get a fresh face on the top. That way, the firm can blame all the stuff that led to reputational damage on prior management, and the firm can say that everything's different now.

Thus, we weren't surprised to hear that, within Goldman, Blankfein resignation talk has begun.