There’s a reason that yesterday, for the first time since the Raj Rajaratnam insider trading trial began, spectators were relegated to an overflow room because courtroom 17B was full to capacity.That reason, as most of you know by now, was Lloyd Blankfein.
Without a doubt the most highly anticipated witness on government’s call list, news broke late Tuesday evening that Blankfein could be called to testify as early as this week.
In the morning before the jury entered the room, federal prosecutor Reed Brodsky asked Judge Holwell and the defence for a favour: could the government interrupt Rajiv Goel’s testimony for two witnesses who would not be able to make it to New York next week?
Both parties allowed it, and, due to impending trips for both Courtney and myself, we thanked our lucky stars that Lloyd would be out of town come March 28th, and had to be called to testify this week.
The government questioned Rajiv Goel for about an hour. He was dismissed for the day, and then a voice came over the PA system: “The government calls its next witness, Lloyd C. Blankfein.” And all heads in the courtroom turned backward, and there he was, standing meekly in front of the big wooden doors.
Blankfein wore blue tie, a white shirt and a dark suit.
He looked and talked to the jury many times as he gave testimony. During sidebars, he watched them. When he said the word “corporate,” there was a Brooklyn twang. His voice is raspy.
And if you watched recordings of the Goldman chief giving congressional testimony last year, recall his posture — it was similar in the stand yesterday: leaning slightly forward, wrinkled brow, head turned slightly to the side. The difference, however, is that this time around, Blankfein was playing the good guy. And this time around, he was far more relaxed.
At times he answered questions so quickly, Judge Holwell or an attorney reminded him to let the question end before he began. But as the morning turned to afternoon, Blankfein relaxed. He even bantered with Raj’s lead attorney, John Dowd — and later, they even shared a hug.
Of course, that’s not a side that proletarians like us get to see up close very often, if at all.
Lloyd The Comedian
During a series of questions on earnings in October, 2008, Blankfein explained why it was so important to be in contact with board members about mid-quarter revenue, at that specific time. Goldman was down. And Goldman was never down. It was shaping up to be the bank’s first ever negative quarter. And worse, consensus in October 2008 was that the bank was making money. When figures were released, it would come as a shock to the market and everyone else.
What did the P&L statement for mid-October, to be discussed at the next board meeting, show, prosecutors asked Lloyd.
“We were losing money,” he said.
The prosecutor asked about the significance of that.
“We generally make money,” Blankfein said.
And everyone laughed, including him. It was the tone.
Other smiley moments involved Dowd asking Blankfein to look at a WSJ article as evidence. Dowd asked if he recognised it. Blankfein said no.
“Surely you read the WSJ,” Dowd said.
“Sometimes,” Blankfein said after a long pause, grinning. “Often. Not always.”
“Be careful, they’re here,” Dowd said. And of course, more chuckling.
Lloyd At Work
During his testimony, we also gleaned some insight into how Blankfein runs his ship: he gets Profit and Loss statements at the end of every business day, via email and voicemail. He admits he rarely reads the email, and garners the necessary information from the latter.
He also talks regularly with his board members in a one-on-one context, often “offline” he said. This gives the director opportunities to talk with Blankfein and raise concerns outside of the hearing of other board members.
He talked about the bank doing work “for the world;” he was humble (and shrewd, of course) when the defence asked him about Goldman Sachs’ vaunted status in the rankings of financial service firms — reducing its success to, “we’re the largest investment bank of a small category;” he joked that “he aspires” to talk to all 10,000 shareholders but he doesn’t always get the time.