February 12, 2002
You set the right context. As interesting as Enron is as either a criminal or regulatory investigation, and it is, I’m mostly interested in it for purposes of revealing the meaning–the need to get on with updating our system to make sense for the twenty-first century, dealing with changes that have occurrred that we’ve been sitting for on a very long time, whether it’s pension reform or accounting reform or corporate governance reform or campaign finance reform.
Q: I read in Congress Daily that you intend to recuse yourself on financial reform. I hope you reconsider.
I will recuse myself if it has something specific to do with Goldman Sachs.
Q: But that’s a lot.
No, no–only if I think it is going to impact their bottom line. If we were talking about analysts generically, I wouldn’t recuse myself. If we brought Goldman Sachs in, I would not question them. When we had a vote last year about SPE’s [special purpose entities] and tax deductions, I thought that would impact their bottom line, so I recused myself from that vote. I have an opinion about it.
Q: But why? Because if farmers recused themselves on the Ag bill—-
I just think, given my specific role at Goldman Sachs, until it’s confirmed to me that I no longer have stock in the company–I put my stock in a blind trust and told them to use a sensible approach to liquidate it as soon as possible–that, until I know that is done, I just don’t want to create an appearance of a conflict. For the same reason, I think [SEC chairman] Harvey Pitt should recuse himself on Arthur Andersen-specific issues [his former client]. If you want his ability to comment as an important part of the dialogue, I don’t have any objection to it. But about Arthur Andersen-specific–are we going to have an investigation?–I think he should opt out.
Q: How bad do you think the rot is in our financial system?
You know, I’m not sure I fully accept the “rot” concept. I think we have not updated our financial system for many years and we’ve allowed for the theme of deregulation to erode the checks and balances in our financial system substantially at a period of time when technology and globalization and financial entrepeurship were growing at geometric paces. So I think there’s as much a failure to stay apace with the system as there was rot. Now I think there is an element of culture–a degradation–about what it is the mission of a company is about. And it has become so narrowly defined in public company terms–an earnings per share or earnings growth philosophy–that the system to some extent has lost track of its other objectives of social responsibility, of ethics, as they relate to employees and their position in society. There is a stewardship reponsibility in the context of society and for the people who work there and for the client customers that use their services or products that is as important as is the bottom line. As a matter of fact, we had a principle at Goldman Sachs–I didn’t create this one, my predecessors did–serve your clients well, your profits will follow. But the point was, there was something more important than just the bottom line ’cause the bottom line will follow if you do a great job.