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CNBC Transcript: Goldman Sachs Senior Chairman and Former CEO Lloyd Blankfein Speaks with CNBC’s Scott Wapner on CNBC’s “Fast Money Halftime Report” Today

WHEN: Today, Tuesday, November 19, 2019

WHERE: CNBC’s “Fast Money Halftime Report

The following is the unofficial transcript of a CNBC interview with Goldman Sachs Senior Chairman and Former CEO Lloyd Blankfein and CNBC's Scott Wapner on CNBC’s “Fast Money Halftime Report” (M-F 12PM – 1PM) today, Tuesday, November 19th. The following is a link to video of the interview on CNBC.com: https://www.cnbc.com/video/2019/11/19/watch-cnbcs-full-interview-with-goldman-sachs-lloyd-blankfein.html.

All references must be sourced to CNBC.

SCOTT WAPNER: I’M SCOTT WAPNER. FRONT AND CENTER THIS HOUR, A HALFTIME EXCLUSIVE, FORMER GOLDMAN SACHS CEO LLOYD BLANKFEIN, LIVE FROM THE CME GROUP’S GLOBAL FINANCIAL LEADERSHIP CONFERENCE HERE IN NAPLES, FL. FROM THE MARKETS TO POLITICS—ALL POINTS IN BETWEEN—WE’LL COVER IT ALL OVER THE NEXT 30 MINUTES. WE BEGIN WITH MR. BLANKFEIN’S REACTION TO THAT NEW TELEVISION AD ON CNBC BY PRESIDENTIAL CANDIDATE ELIZABETH WARREN.

[WARREN AD]:

ELIZABETH WARREN: IT IS TIME FOR A WEALTH TAX IN AMERICA. I’VE HEARD THAT THERE ARE SOME BILLIONAIRES WHO DON’T SUPPORT THIS PLAN.

LEON COOPERMAN: THE VILLIFICATION OF BILLIONAIRES MAKES NO SENSE TO ME. IT’S BULL.

JOE RICKETTS: SHE WOULD RUIN WHAT WE HAVE.

LLOYD BLANKFEIN: SHE PROBABLY THINKS MORE OF CATACLYSMIC CHANGE TO THE ECONOMIC SYSTEM AS OPPOSED TO TINKERING.

WAPNER: LLOYD BLANKFEIN RESPONDED ON TWITTER. HE’S WITH US NOW LIVE TO REACT IN PERSON. THANKS FOR BEING HERE.

LLOYD BLANKFEIN: THANKS FOR HAVING ME.

WAPNER: WE JUST WATCHED THIS AGAIN TOGETHER.

BLANKFEIN: I TELL YOU, I CAN WATCH THAT OVER AND OVER AGAIN. IT’S FANTASTIC.

WAPNER: WHERE WERE YOU WHEN YOU FIRST SAW THAT? WHAT WAS YOUR INITIAL REACTION?

BLANKFEIN: I WAS KIND OF BRUSHING MY TEETH IN THE MORNING WHERE I NORMALLY WATCH THE CHANNEL SO I WAS SURPRISED AND FLATTERED TO THINK THAT I COULD PLAY SUCH AN IMPORTANT ROLE IN THE PRESIDENTIAL CAMPAIGN.

WAPNER: WERE YOU ANGRY?

BLANKFEIN: NO, I WASN’T ANGRY. I’M A LITTLE BIT STAGGERED THAT IT’S GOTTEN TO THIS POINT OF KIND OF NAME CALLING. HOW PROVOCATIVE WAS MY STATEMENT THAT I WOULD TINKER WITH THE FINANCIAL SYSTEM AND I WOULDN’T EXPLODE IT AND THAT BECOMES IN THIS KIND OF POLARIZED WORLD, THAT’S A VERY RADICAL STATEMENT TO SAY THAT YOU WOULDN’T BLOW UP THE BEST FINANCIAL AND ECONOMIC SYSTEM IN THE WORLD.

WAPNER: LET ME READ FROM YOUR TWEET, IF I MAY, OF COURSE YOU SAY YOU WERE SURPRISED IN THE TWEET. YOU GO ON TO SAY, "NOT MY CANDIDATE, BUT WE ALIGN ON MANY ISSUES. VILIFICATION OF PEOPLE AS A MEMBER OF A GROUP MAY BE GOOD FOR HER CAMPAIGN, NOT THE COUNTRY. MAYBE TRIBALISM IS JUST IN HER DNA." THAT WAS A DIG AT HER CLAIMS OF NATIVE AMERICAN HERITAGE, AT THE END?

BLANKFEIN: WELL, THE STATEMENT, IT’S LIKE LOOKING AT A PIECE OF IMPRESSIONIST ART. YOU ASK, WHAT WAS THE ARTIST THINKING? IT’S REALLY FOR YOU TO TAKE AWAY.

WAPNER: BUT WAS THAT THE MESSAGE, THOUGH? YOU KNEW WHAT YOU WERE SAYING.

BLANKFEIN: THE MESSAGE STANDS.

WAPNER: BUT WHY DO YOU CONTINUE TO FIND YOURSELF AT THE IRE OF BERNIE SANDERS OR ELIZABETH WARREN? WHY?

BLANKFEIN: WELL, I DON’T THINK IT’S—I MEAN, IT’S ME PERSONALLY BUT I DON’T THINK IT’S ME PERSONALLY. I WORKED FOR A VERY BIG INSTITUTION AT THE CENTER OF THE FINANCIAL WORLD. I HAVE NAME RECOGNITION. IT’S A FUNNY MOMENT. LOOK, MY POLITICAL POSITION IS KNOWN; I USED TO BE A KIND OF A MODERATE DEMOCRAT AND NOW, WITHOUT HAVING MOVED ANYTHING, I’VE BECOME LIKE A -- IN THEIR EYES – KIND OF A RIGHT-WINGER BECAUSE I DON’T WANT TO BLOW UP THE FINANCIAL SYSTEM. IT’S AN ODD TIME WHERE WE’RE SHIFTING A BIT FROM POPULISM—WHERE YOU WANT TO REPRESENT UNDERREPRESENTED PEOPLE, PEOPLE THAT FEEL THEY DIDN’T HAVE A VOICE AND YOU WANT TO APPEAL TO THEM—TO A KIND OF DEMAGOGUERY WHERE IN ADDITION TO TRYING TO HELP UNDERREPRESENTED PEOPLE, YOU’RE LABELLING PEOPLE AS VILLAINS WHO MAY OR MAY NOT HAVE A ROLE IN THE PROBLEM JUST TO VILIFY THEM IN ORDER TO IMPROVE YOUR PROSPECTS. AND SO THE MIGRATION FROM POPULISM TO DEMAGOGUERY IS A BIT OF A DANGEROUS MOMENT. I JUST FEAR FOR THE POLITICAL PROCESS IN THE UNITED STATES, THAT’S ALL. BUT GUESS WHAT, WE’LL SURVIVE THIS AND WE’LL GET THROUGH IT. THERE’S A CYCLE TO IT.

WAPNER: YOU DO SAY IN THE TWEET YOU’RE ALIGNED ON SEVERAL ISSUES, ON MANY ISSUES – THE WORD YOU USED. ON WHAT ISSUES ARE YOU ALIGNED WITH SENATOR WARREN ON?

BLANKFEIN: I BELIEVE STRONGLY THAT THE ECONOMIC SYSTEM SHOULD BE FAIR, THAT PEOPLE SHOULDN’T BE UNDERREPRESENTED IN RECEIVING THE FRUITS OF WEALTH CREATION. SO I’M FOR PROGRESSIVE TAX, I’M FOR MOST OF THE SOCIAL ISSUES THAT SHE’D BE FOR – LGBT ISSUES, OTHER KINDS OF GENDER RIGHTS. BUT AT THE END OF THE DAY, I RECOGNIZE THE GREAT SUCCESS OF THE WEALTH CREATION MACHINE AND THE LESS SUCCESSFUL PART OF THE WEALTH DISTRIBUTION MACHINE. AND SO WE CAN RESPOND TO THAT WITH PROGRESSIVE TAXES, WE CAN MODIFY OUR ESTATE TAX. BUT WE SHOULDN’T HAVE UNWORKABLE, DEMOTIVATING KINDS OF TAXES THAT WILL ACHIEVE EQUALITY BY REDUCING EVERYBODY’S LEVEL OF WEALTH.

WAPNER: I’M WONDERING WHAT YOU MAKE OF THE GENERAL TONE OF WARREN VERSUS WALL STREET. I DON’T KNOW IF YOU SAW THE INTERVIEW THAT LEE COOPERMAN DID ON MY SHOW WHERE HE LITERALLY BROKE DOWN IN TEARS THINKING ABOUT WHERE THE COUNTRY IS AT THE CURRENT MOMENT AND THINKING TO HIMSELF, I’M SOMEBODY WHO’S SPENT THE BETTER PART OF MY ADULT LIFE TRYING TO GIVE BACK, I’VE TAKEN THE BUFFETT GIVING PLEDGE, I’VE SENT 500 KIDS TO COLLEGE, AND HERE I FIND MYSELF IN AN ADVERTISEMENT AS THIS EVILDOER ON WALL STREET, BUT IT’S COOPERMAN, IT’S YOU, IT’S RICKETS, IT’S OTHERS WHO HAVE MADE THEIR WAY INTO THIS PARTICULAR AD. YOU KNOW WHAT I’M GETTING AT.

BLANKFEIN: YEAH, I HAVE A THICKER SKIN. I DON’T WANT TO SPEAK FOR LEE. HE’S A GREAT GUY, AND HE IS A VERY PHILANTHROPIC GUY, AND HE’S ALL THE THINGS HE SAYS HE IS, A VERY RATIONAL GUY. HE WAS RESPONSIBLE FOR RESEARCH AT GOLDMAN SACHS. HE PUBLISHED VERY ACADEMIC, VERY CAREFUL. AND THAT’S NOT WHAT’S CALLED FOR. SO HE PUT OUT A VERY REASONED PAPER, VERY HARD TO—NO PUN INTENDED—IMPEACH THESE DAYS. SOME OF THE POINTS THAT HE WAS MAKING, BUT IT DIDN’T MATTER BECAUSE IT WASN’T GRAPPLED HEAD ON. SOMEBODY JUST TAUNTED HIM AND MADE FUN OF HIM AND THAT’S THE ENVIRONMENT THAT WE’RE IN, AND SO IT BECOMES A SYMBOL. VERY HARD TO AT THIS MOMENT TO JUST – YOU KNOW, SOMEBODY SAYS YOU’RE A BAD GUY AND THEN YOU GO BACK AND SAY, OH I’M NOT SUCH A BAD GUY. THAT’S NOT AN ARGUMENT THAT PEOPLE WIN SO, YOU KNOW, I’M NOT DYING TO BE HERE. I COULD BE HERE. IT’S NOT BOTHERING ME. GIVEN MY CHOICE, I’D JUST, YOU KNOW, IF I COULD I WOULD JUST BURY THE HATCHET AND MOVE ON.

WAPNER: WHAT’S YOUR TAKE ON THE WEALTH TAX?

BLANKFEIN: I CAN UNDERSTAND WHERE THE WEALTH TAX IS COMING FROM. THAT’S A VERY GOOD WAY TO AGAIN, SHARE THE REWARDS, SHARE THE FRUITS, WHICH YOU CAN ALSO ACHIEVE THROUGH A PROGRESSIVE TAX SYSTEM WHICH AFFECTS ONLY INCOME IF YOU DON’T REALIZE INCOME, YOU’RE NOT TOUCHED BY IT. AN ESTATE TAX AT THE END OF DEATH WOULD ACCOMPLISH THE SAME THING. I UNDERSTAND WHERE IT’S COMING FROM, I UNDERSTAND THE GOALS. THE PROBLEM WITH IT IS IT’S COMPLETELY UNWORKABLE. FORGET ABOUT THE CONSTITUTIONALITY. WHERE IT’S BEEN ATTEMPTED, IT’S HARD. TO SETTLE AN ESTATE OFTEN CAN TAKE MANY YEARS TO SETTLE AN ESTATE. HOW DO YOU MARK TO MARKET YOUR ENTIRE WEALTH EVERY YEAR – FARMERS WHO OWN FARMS, PEOPLE WHO OWN HOMES? IT’S NOT JUST FANCY PEOPLE WITH TENS OF MILLIONS OF DOLLARS WORTH OF ART COLLECTIONS – IT’S ANYBODY WITH A FARM OR A HOME WOULD HAVE TO ESTABLISH WHAT THAT HOME WAS WORTH EVERY YEAR. YOU’D SPEND YEARS FIGHTING ABOUT IT AND NEXT YEAR YOU’D HAVE TO DO IT AGAIN.

WAPNER: DID YOU THINK ABOUT WHETHER YOU WERE GOING TO RESPOND TO THE WARREN AD OR WAS IT A SPUR OF THE MOMENT THING? I ASKED THE QUESTION IN THE CONTEXT OF—AND I ASKED LEE COOPERMAN THIS, AS WELL—AS TO WHETHER YOU ALL THINK YOU’RE PLAYING RIGHT INTO HER HANDS BY RESPONDING AND GIVING HER MORE MATERIAL TO PLAY AROUND WITH?

BLANKFEIN: MY LIFE IS NOT GEARED TO THIS. I’M NOT LIVING TO RESPOND TO ELIZABETH WARREN OR ANYBODY. MY WHOLE RESPONSE CONSISTED OF 280 CHARACTERS IN A TWEET, MOST OF WHICH WASN’T ADDRESSING ANYTHING THAT SHE WAS SAYING, SO THIS IS NOT A BIG MOMENT IN MY LIFE AND I DON’T KNOW -- FRANKLY, I DON’T KNOW WHAT IT MEANS. I STARTED OFF THE CONVERSATION BY SAYING I WAS A LITTLE BIT, IN A WEIRD KIND OF WAY, IT’S A LITTLE BIT FLATTERING. I DIDN’T THINK, GIVEN MY NONCOMBATANT RETIRED STATE, I DIDN’T THINK I COULD BE THAT IMPORTANT FOR HER TO LABEL ME THAT WAY.

WAPNER: IF I WERE TO ASK YOU, ARE YOU SURPRISED THAT THERE’S THIS STILL LINGERING ANIMOSITY IN CERTAIN CORNERS OF THE POLITICAL SPHERE TOWARDS WALL STREET, THAT YOU GUYS ARE THE ONES WHO CAUSED THE CRISIS? NOT YOU AND GOLDMAN, BUT YOU GUYS COLLECTIVELY, YOU CAUSED THE NEAR DESTRUCTION OF THE FINANCIAL SYSTEM AND HERE WE ARE TODAY AND PEOPLE CAN’T FORGET ABOUT THAT?

BLANKFEIN: I THINK PEOPLE WHO ARE RESPONSIBLE AT THE CENTER OF THE FINANCIAL SYSTEM, GOING BACK TO THE FINANCIAL CRISIS, GOING BACK TO THE DEPRESSION, GOING BACK TO THROUGHOUT THE HISTORY OF MERCANTILISM, HAVE ALWAYS FOUND THEIR MOMENTS OF VILIFICATION BECAUSE PEOPLE WHO BUILD THINGS, YOU CAN SEE IT, BUT THE PEOPLE WHO ARE RESPONSIBLE TO MAKE SURE THE RIGHT THINGS GET BUILT IN THE RIGHT TIME AND THE RIGHT MONEY IS SPENT FOR IT AND WHEN MISTAKES ARE MADE AND THE WRONG THINGS ARE BUILT TO, REPOSSESS THOSE ASSETS AND RECYCLE THE CAPITAL, THEY’RE NOT ALWAYS LOVED. SO PEOPLE AT THE CENTER OF THE FINANCIAL SYSTEM PLAY A VERY, VERY IMPORTANT ROLE IN ALLOCATION CAPITAL, IN ALLOCATING CAPITAL, ALLOCATING RISK BUT NOT ONLY IS THEIR WORK NOT ALWAYS APPRECIATED, BUT THE PEOPLE WHO FIND THEMSELVES ON THE WRONG SIDE OF THAT ALLOCATION HAVE A LOT OF DISDAIN FOR THE PEOPLE WHO ARE AT THE CENTER OF THAT PROCESS.

WAPNER: WOULD WE BE HERE TODAY HAD SOME GONE TO JAIL AS A RESULT OF WHAT HAPPENED DURING THE CRISIS? IS THAT PART OF THIS LINGERING ANIMOSITY?

BLANKFEIN: I DON’T KNOW -- NO. I THINK IF WE NEVER HAD A FINANCIAL -- I SEEM TO RECALL THAT BEFORE THE FINANCIAL CRISIS, I HAD TO RESPOND TO THESE KIND OF QUESTIONS, AS WELL. SO THERE IS ALWAYS, AGAIN, SOME KIND OF -- SOME KIND OF RESENTMENT IN THE WORST TIME, LACK OF APPRECIATION IN THE BETTER TIMES, FOR WHAT THE PEOPLE WHO ARE AT THE CENTER OF THE ALLOCATION PROCESS OF THE FINANCIAL SYSTEM—AGAIN, RISK, CAPITAL, PEOPLE—AGAIN, WHEN YOU HAVE THE ROLE THAT I HAD IN MY OLD FIRM, YOU HAVE PEOPLE WHO HAVE CAPITAL TO INVEST AND PEOPLE WHO NEED CAPITAL FOR THEIR BUSINESSES. THE PEOPLE WHO DON’T GET THE CAPITAL RESENT YOUR DECISION NOT TO GIVE IT TO THEM, AND THE PEOPLE WHO HAVE THE CAPITAL TO INVEST MAY NOT LIKE IT IF, AFTER THE FACT, IT DIDN’T GO TO THE BEST PLACE POSSIBLE.

WAPNER: THIS WHOLE THING HAS REALLY SPURRED A CONVERSATION ABOUT CAPITALISM IN AND OF ITSELF. WE’RE DISCUSSING IT MORE I THINK RECENTLY THAN WE HAVE IN THE MOST RECENT PAST. IS THE SYSTEM BROKEN? DOES CAPITALISM NEED A FIX?

BLANKFEIN: NO, IT’S NOT. LOOK, WE’RE SITTING HERE. THERE’S A LOT OF UNUSUAL ASPECTS TO THIS MOMENT IN TIME WHERE THE PASSIONS AND THE -- THE PASSIONS ARE THE GREATEST AT A MOMENT WHEN THINGS AREN’T IN REALLY IN THE GREATEST DISTRESS WE’VE EVER FACED IN OUR LIVES. I THINK THE TWO PARTS OF THE CAPITALISM, KIND OF, IF YOU WILL, SOCIALISM DEBATE ARE REALLY, HOW DO YOU ALLOCATE THE BENEFITS AND THE PRODUCTIVE SIDE, WHAT YOU’VE PRODUCED OUT OF THE SYSTEM. I THINK THAT’S VERY, VERY FAIR GAME FOR CONVERSATION. THE OTHER PART OF IT, OF SOCIALISM DEBATE VERSUS CAPITALISM, IS HOW MUCH OF THE ECONOMIC SYSTEM SHOULD BE RUN BY THE GOVERNMENT? NOW, THERE IT’S ALMOST HARD FOR ME TO BELIEVE -- ONLY PEOPLE WITHOUT EXPERIENCE IN THIS MATTER COULD THINK WHAT WE REALLY NEED IS TO HAVE THE GOVERNMENT RUN A MUCH BIGGER SECTION OF THE ECONOMY BECAUSE I KNOW I REALLY WANT THE TRANSPORTATION SYSTEM TO BE LIKE AMTRAK ALL THE WAY THROUGH, OR HOUSING TO BE LIKE THE NEW YORK CITY HOUSING AUTHORITY, WHICH IS GOVERNMENT-RUN HOUSING, OR YOU KNOW, THERE ARE GREAT PEOPLE WHO WORK FOR THE VETERANS ADMINISTRATION, SOME PEOPLE GET GREAT CARE THERE, BUT I DON’T KNOW THAT EVERYBODY WANTS THEIR HEALTH CARE SYSTEM TO BE RUN AND TO BE WAITING ON LINE FOR WEEKS FOR AN APPOINTMENT LIKE SOME OF OUR VETERANS DO IN CONNECTION WITH THE V.A. SYSTEM. SO FOR ME, HAVING THE GOVERNMENT RUN MORE AND MORE OF THE ECONOMY IS NOT A WAY ANYBODY WOULD GO WHO EVER EXPERIENCED THE GOVERNMENT RUNNING A BIGGER PART OF THE ECONOMY.

WAPNER: THIS ISN’T NECESSARILY A CONVERSATION THOUGH OF CAPITALISM VERSUS SOCIALISM. IT’S EVEN THE LIKES OF A RAY DALIO OR MARC BENIOFF SUGGEST THAT CAPITALISM IN AND OF ITSELF COULD BE TWEAKED? MAYBE MORE MY WORD MORE THAN THEIRS. IT’S THE IDEA.

BLANKFEIN: OF COURSE EVERYTHING CAN BE TWEAKED. AND THESE ARE NAMES. I TRIED TO BREAK IT DOWN TO YOU INTO ALLOCATION -- THE ALLOCATION OR REALLOCATION OF WEALTH ON THE ONE HAND OR HOW MUCH OF THE SYSTEM SHOULD BE RUN BY THE GOVERNMENT, IS TWO BIFURCATED THINGS. THE LABELS ARE DISTRACTING. I THINK THAT’S REALLY WHAT THE DEBATES ARE ABOUT. SHOULD THERE BE PRIVATE HEALTH CARE OR SHOULD THERE AN ENTIRE GOVERNMENT-ADMINISTERED SYSTEM? AND ON PAPER, IT ALWAYS LOOKS LIKE THE GOVERNMENT SYSTEM WOULD BE EFFECTIVE BECAUSE YOU DON’T HAVE ANYBODY HIVING OFF PROFITS. BUT IT’S THAT PROFIT MOTIVE THAT MAKES SURE YOU GET THE BEST PEOPLE IN THE JOBS, PEOPLE WORK HARD, LONGER HOURS THAN THEY SHOULD, YOU GET RID OF INCOMPETENT PEOPLE, YOU REWARD PEOPLE WHO WORK ESPECIALLY HARD AND ARE ESPECIALLY GOOD, YOU SHUT DOWN THINGS THAT DON’T WORK, EVEN IF IT’S IN SOME CONGRESSMAN’S DISTRICT AND THE CONGRESSMAN WISHES THOSE JOBS WERE PRESERVED FOR HIS DISTRICT. THE PRIVATE SECTOR CAN BEHAVE IN WAYS THAT PEOPLE IN GOVERNMENT CANNOT, SO NO SHADE ON THE PEOPLE IN THE GOVERNMENT—MY DAD WORKED FOR THE POST OFFICE—BUT AGAIN, LOOK AT THE POST OFFICE.

WAPNER: SO HOW DO YOU THINK ABOUT THE ISSUE OF INCOME EQUALITY? PEOPLE SAY IT’S THE PREEMINENT ISSUE RIGHT NOW OF OUR TIME. AND CERTAINLY IT’S ONE OF THE PRINCIPLE RISKS TO THE MARKET, THE LONGER THIS LINGERS--

BLANKFEIN: INEQUALITY IS THE RISK TO THE STABILITY OF SOCIETY AND SO I THINK WE WOULD HAVE TO HAVE LESS OF IT. WHAT ARE THE ROOT CAUSES OF IT? I WOULD SAY INTEREST RATE POLICY – YOU LOWER INTEREST RATES, THE VALUE OF ASSETS GO UP, PEOPLE WHO HAVE ASSETS GET RICHER, PEOPLE WHO DON’T HAVE ASSETS AREN’T BENEFITTED FROM THE INFLATION OF ASSET PRICES, SO THAT. TECHNOLOGY, THE ADVANCE OF TECHNOLOGY, CREATES THAT KIND OF INCOME BIFURCATION. UBER COMES ALONG AND EFFICIENTLY EVERY DRIVER NEVER HAS AN EMPTY CAR, THEY’RE DRIVING AROUND, SO MAYBE YOU NEED—AND I’M MAKING THIS NUMBER UP—30,000 FEWER TAXIS IN NEW YORK CITY THAN YOU HAD BEFORE. WELL, THAT VALUES GOES TO THE SHAREHOLDERS AND THE INITIAL VENTURE CAPITALISTS WHO CREATED UBER. THEY GET RICHER. MEANWHILE 30,000 CAB DRIVERS LOSE THEIR JOB SO THERE’S A MIGRATION OF WEALTH FROM LABOR TO CAPITAL. SO THAT GETS REPEATED BECAUSE OF TECHNOLOGY. PEOPLE WHO CREATE THE TECHNOLOGY GET THE WEALTH THAT COMES FROM NEEDING FEWER PEOPLE TO DO THE JOB AND SO THERE ARE FEWER PEOPLE EMPLOYED. NOW, I’LL TELL YOU WHAT’S HAPPENING AT THE SAME TIME, OTHER INDUSTRIES ARE BEING CREATED, THERE ARE MORE SERVICES AND WE HAVE LOW UNEMPLOYMENT IN THIS COUNTRY AND OVER TIME, LOW UNEMPLOYMENT MEANS THAT NEW IDEAS COME ALONG AND THEY HAVE TO BID UP THE WAGES OF EXISTING WORKERS TO PRY THEM FROM THEIR OTHER JOBS. AND THAT’S IN FACT WHAT’S HAPPENING NOW AND SO WAGES ARE STARTING TO RISE. ARE THEY GOING FAST ENOUGH? DO I WISH IT HAPPENED SOONER? DO I WISH IT WOULD HAVE CONVERGED SOONER? YES. SHOULD WE JUST WAIT FOR THAT TO HAPPEN? NO, I’M FOR TINKERING WITH THE SYSTEM. I NEVER MET SOMETHING I COULDN’T TINKER WITH AND TRY TO IMPROVE.

WAPNER: DO YOU THINK CEOs MAKE TOO MUCH MONEY?

BLANKFEIN: DO YOU THINK TELEVISION REPORTERS MAKE TOO MUCH MONEY? I DO.

WAPNER: YEAH?

BLANKFEIN: YEAH.

WAPNER: I DON’T KNOW IF TELEVISION REPORTERS ARE MAKING SUCH A GREAT AMOUNT OF MONEY AND THOSE AT THE BOTTOM OF THE TELEVISION BUSINESS AREN’T MAKING -- THE WEALTH OF CEOS IS GOING UP AT AN AMAZINGLY HIGH RATE RELATIVE TO THE RANK AND FILE.

BLANKFEIN: I’M JUST GUESSING THAT IF YOU -- THAT SOMEONE MUST HAVE DECIDED THAT YOU IN THIS SEAT DRAWS MORE VIEWERS THAN IF YOU AND YOUR CAMERAMAN SWITCH PLACES AND THEREFORE YOU COMMAND A HIGHER WAGE FOR THE JOB YOU DO, EVEN THOUGH WHEN I CHATTED WITH THE FELLOW BACK THERE, HE SEEMED -- I LIKED HIM A HELL OF A LOT.

WAPNER: HE’S A GOOD GUY.

BLANKFEIN: AND HE PROBABLY WORKS HARD.

WAPNER: BUT THE SPREAD BETWEEN WHAT I MAKE AND WHAT HE MAKES IS PROBABLY WAY SMALL COMPARED TO WHAT YOU MADE COMPARED TO THE RANK AND FILE, NO? OR WHAT ANY CEO MAKES TO THE RANK AND FILE, NO?

BLANKFEIN: IT’S A WIDE SPREAD AND IT’S DICTATED BY – SOMEBODY, SOMEWHERE MUST HAVE THE MISAPPREHENSION THAT PEOPLE IN THOSE JOBS ARE DOING A JOB THAT THE NEXT BEST JOB WHO COULD BE IN THAT JOB WOULDN’T FULFILL.

WAPNER: DO YOU THINK IT’S OUT WHACK, THOUGH?

BLANKFEIN: OUT OF WHACK WITH WHAT, SCOTT?

WAPNER: I’M JUST ASKING YOU A QUESTION THAT JAMIE DIMON WAS ASKED THIS PAST WEEK OR THE WEEK BEFORE ON SIXTY MINUTES BY LESLIE STAHL. I MEAN, THAT SORT OF GETS BACK TO THE HEART OF THE CONVERSATION WE’RE HAVING.

BLANKFEIN: I THINK WHAT YOU HAVE TO DECIDE IS – IF YOU FILM A MOVIE AND YOU GET THE NUMBER ONE BOX OFFICE STAR TO BE IN THAT MOVIE AND YOU THINK WHAT IS THAT MOVIE WORTH WITH THE NUMBER ONE BOX OFFICE STAR IN IT VERSUS THE NUMBER 40 BOX OFFICE STAR? IF SOMEBODY THINKS THEY CAN MAKE AN EXTRA $50 MILLION BY HAVING THE NUMBER ONE GUY IN IT, WHAT’S THAT GUY WORTH AS A DIFFERENTIAL OVER THE OTHER GUY? EVERY INDUSTRY HAS ITS OWN MARKET MECHANISMS. I DON’T THINK ANYBODY SHOULD APOLOGIZE WHERE THEY END UP IN THAT PROCESS AND THEN YOU CAN ASK THEM WHAT THEY DO WITH THE MONEY, WHETHER THEY’RE GOOD CITIZENS, WHETHER THEY GIVE BACK TO SOCIETY, WHETHER IT SERVES AN IMPORTANT SOCIAL PURPOSE OR WHETHER IT’S COUNTERPRODUCTIVE. I THINK THESE ARE ALL FAIR THINGS. I’M NOT CRITICIZING YOU FOR ASKING THE QUESTION, ALTHOUGH MAYBE YOU SHOULDN’T ASK IT TEN DIFFERENT TIMES.

WAPNER: WELL, I THINK IT SORT OF GETS TO THE HEART OF WHY WE’RE HAVING THE CONVERSATION ABOUT INCOME INEQUALITY AND WHY PEOPLE LIKE ELIZABETH WARREN PUT PEOPLE ON WALL STREET IN A TELEVISION AD.

BLANKFEIN: I DON’T THINK THE WHOLE ECONOMIC SYSTEM HINGES ON WHETHER TAYLOR SWIFT OR THE NFL QUARTERBACK VERSUS THE LINEMAN, OR THIS OR THAT, WHAT THE RELATIVE PROPORTION. I THINK IT’S AN IMPORTANT THING IF YOU’RE TALKING ON THE SIDE ABOUT THAT PARTICULAR INDUSTRY OR WHAT IT CAN AFFORD, BUT I THINK THE REAL ISSUE FOR THE OVERALL ECONOMY, IN A MACRO SENSE, IS AGAIN, WHAT SHOULD BE THE EXTENT OF GOVERNMENT PARTICIPATION? THAT’S ONE OF THE BIG DEBATES NOW, WHETHER THE GOVERNMENT SHOULD TAKE OVER HEALTH CARE, WHETHER THE GOVERNMENT SHOULD TAKE OVER HOUSING—

WAPNER: MEDICARE FOR ALL, THINGS LIKE THAT.

BLANKFEIN: --AND THEN THE DISTRIBUTION QUESTION IS ONE OF CALIBRATION AND DEGREE AND WHERE I AM ON THAT SPECTRUM, WHICH WAS THE OBSERVATION THAT I MADE, WAS THAT I MAY BE IN THE MIDDLE -- I’M NOT AN EXTREME END OF THAT SPECTRUM. I GREW UP IN PUBLIC HOUSING IN NEW YORK CITY, MY DAD WORKED NIGHTS AT THE POST OFFICE. I MIGHT SURPRISE YOU IN THAT I NEVER BEHAVED IN MY LIFE TO MAXIMIZE MY INCOME OVER OTHER CONSIDERATIONS. AND SO I MIGHT FIND MYSELF KIND OF DIRECTIONALLY ON LINE WITH PEOPLE WHO WOULD LIKE TO SEE A MORE EQUALLY CALIBRATED KIND OF DISTRIBUTION OF THE SYSTEM, BUT I DON’T WANT TO DO ANYTHING TO IMPEDE THE WEALTH CREATION OF THE SYSTEM, AND THAT’S A LITTLE BIT WHAT THE DEBATE SHOULD BE ABOUT, IF YOU ASK ME.

WAPNER: I UNDERSTAND. IT’S SAFE TO SAY YOU’RE NOT SUPPORTING ELIZABETH WARREN. SO WHO ARE YOU SUPPORTING? YOU ARE A SELF-DESCRIBED ROCKEFELLER REPUBLICAN, AT ONE POINT IN YOUR LIFE.

BLANFEIN: ROCKEFELLER, TO THIS DAY, I HAVE NO COMPLAINS ABOUT. HE’S NOT CRITICIZED ME LATELY.

WAPNER: IF HE DID, YOU WOULD PROBABLY HAVE A TWEET ABOUT IT. SERIOUSLY, WHO ARE YOU SUPPORTING?

BLANKFEIN: I’LL LET THIS PLAY OUT. AGAIN, I’M A MILITANT MODERATE AND ALSO NOT JUST WHERE I AM ON THE OUTCOMES, BUT I’M ALSO FOR THAT BECAUSE I LIKE THE STABILITY OF SOCIETY. YOU KNOW, EVERYBODY TODAY, YOU KNOW, IN THE LAST ADMINISTRATION PRODUCED SOMEBODY WHO JUST THE FIRST DAY IN OFFICE WANTED TO JUST UNDO EVERYTHING THAT WAS DONE. IF THE GOVERNMENT CHANGES IN THE NEXT ELECTION CYCLE, THE FIRST THING IT IS GOING TO DO, EXECUTIVE ORDERS ARE GOING TO FLY AND JUST UNDO EVERYTHING ELSE. WE’RE GOING TO GO BACK FROM ONE EXTREME TO ANOTHER. THE OTHER GOOD THING ABOUT MODERATION IS THAT IT CREATES A MORE STABLE ENVIRONMENT GOING FORWARD. SO, AGAIN, THE RADICAL COMMENT THAT I MADE THAT INVITED THAT NEGATIVE COMMENT WAS I WOULD TINKER WITH THE SYSTEM BUT I WOULDN’T BLOW UP THE ECONOMIC SYSTEM. AND IF I HAD TO SAY IT OVER AGAIN, I WOULD JUST ADD I WOULDN’T BLOW UP THE ECONOMIC SYSTEM THAT IS GENERATING – THAT IS REALLY IN FACT THE MOST SUCCESSFUL AND HAS THE MOST GROWTH. YOU KNOW, IT’S VERY RARE THAT THE BIGGEST IS THE MOST NIMBLE AND THE MOST FLEXIBLE AND FAST GROWING, BUT THE UNITED STATES ECONOMY IS ALL OF THOSE THINGS AMONG DEVELOPED COUNTRIES SO I WOULD TAKE PRIDE IN IT WHILE RECOGNIZING THERE ARE FLAWS THAT WE SHOULD CORRECT. BUT AGAIN, WE’RE IN A VERY, VERY POLITICAL MOMENT AND AGAIN, AT THE JUNCTURE BETWEEN POPULISM AND DEMAGOGUERY – YOU KNOW, WHEN I SAY DANGEROUS, I’M NOT – I DON’T WANT TO PRODUCE ANOTHER REACTION – I’M JUST SAYING I WISH PEOPLE WOULD CALL OUT THAT KIND OF THING. I MEAN, THE ONLY THING – THE ODD THING IN THAT COMMERCIAL, I’M USED TO WALL STREET GETTING PELTED, I’M USED TO FIRMS BEING NAMED BUT GOING AFTER SPECIFIC INDIVIDUALS WHO REALLY DIDN’T RAISE THEIR HAND, ARE NOT REALLY THAT ENGAGED IN THE PROCESS LIKE MY FRIEND LEE COOPERMAN AND, YOU KNOW, IT JUST SEEMS TO ME GOSH, IT’S TAKEN A NEW DIRECTION. IS THAT REALLY GOOD, SHOULD WE KIND OF APPLAUD AND CLAP FOR THAT? I MEAN, I’M NOT SO SURE.

WAPNER: YOU’RE AN EQUAL OPPORTUNITY TARGET IF NOTHING ELSE. I MEAN, BETWEEN WARREN, SANDERS AND EVEN PRESIDENT TRUMP IN 2016.

BLANKFEIN: I KNOW, I MEAN THAT’S RIGHT. I GOT FROM THAT. I’M GLAD I COULD PLAY MY ROLE IN UNIFYING THE COUNTRY.

WAPNER: HOW DO YOU THINK PRESIDENT TRUMP’S DONE?

BLANKFEIN: LISTEN, I’M SURE THERE ARE VILLAGES IN THE AMAZON THAT HAVEN’T SEEN ELECTRICITY WHERE THEY’RE SITTING AROUND A TABLE TALKING ABOUT PRESIDENT TRUMP EVERY DAY. THIS IS A VERY WELL-TROD TERRITORY HERE. I WOULD SAY THAT ON ECONOMIC ISSUES, HE ACTUALLY IF YOU LOOK WHERE THINGS ARE, I THINK HE’S DONE PRETTY WELL AND IT CRAZY NOT TO ACKNOWLEDGE THAT, EVEN IF YOU CLEARLY DON’T LIKE HIS TEMPERAMENT AND IF YOU DON’T LIKE THE BURDENS HE’S PUTTING ON OUR INSTITUTIONS AND THE STRESSES IN THE FABRIC OF THE COUNTRY. AND THE POOR ROLE MODEL IN A LOT OF WAYS HE’S SETTING FOR PEOPLE IN THE COUNTRY.

WAPNER: YOU WERE SUPPORTIVE AT LEAST SOMEWHAT OF HIS TARIFFS. YOU SAID PRIOR, “I DON’T THINK HE’S WRONG HERE, TARIFFS MIGHT BE AN EFFECTIVE NEGOTIATING TOOL. SAYING IT HURTS US IMISSES THE POINT. CHINA RELIES MORE ON TRADE AND LOSES MORE.”

BLANKFEIN: YES. SO LISTEN, I’M A REGISTERED DEMOCRAT. I WAS A HILLARY CLINTON SUPPORTER, BUT I WOULD LOOK AT WHAT WORKS AND GO ALONG WITH IT. ON THE ISSUE OF TARIFFS, YOU KNOW, AGAIN, PEOPLE – IT’S PUT A BURDEN ON CERTAIN PEOPLE IN AMERICA, THAT’S FOR SURE BUT I GIVE HIM CREDIT, I GIVE THE PRESIDENT CREDIT FOR TAKING ON THIS ISSUE OF HOW TO GET CHINA TO CONFORM TO STANDARDS OF INTERNATIONAL BEHAVIOR IN THE TRADE ARENA. HE’S TAKEN THAT ON OTHER PEOPLE HAVE JUST PUNTED ON THIS. AND IF THOSE PEOPLE HAVE BETTER IDEAS FOR HOW TO DO IT, LET’S HEAR THEM. IT’S VERY EASY TO STAND ON THE SIDE AND SAY, WELL, AMERICANS ARE GETTING HURT IN THE PROCESS. OF COURSE AMERICANS ARE GETTING HURT IN THE PROCESS. THE OBSERVATION I MAKE ABOUT THESE SANCTIONS – LET’S RELATE IT. YOU KNOW, WE JUST HAD A STRIKE AT GM. LET’S RELATE IT TO A LABOR STRIKE. THE UNION STRIKES GM. DOES THE UNION LEADERSHIP KNOW THAT WORKERS ARE GOING TO GET HURT BY THAT STRIKE? OF COURSE. THEY’RE GOING TO FOREGO WAGES. IS GM GOING TO GET HURT? OF COURSE GM IS GOING TO GET HURT. WHY DOES LABOR DO IT IF THEY KNOW THEIR PEOPLE ARE GOING TO GET HURT? BECAUSE GM THINKS THEY ARE IN A MORE POWERFUL POSITION, LABOR THINKS IT IS IN A MORE POWERFUL – HOW DO YOU GET A MARKET-CLEARING COMPROMISE UNLESS EACH SIDE INFLICTS PAIN ON THE OTHER SO TO STABILIZE SO EACH COULD REALIZE THE STRENGTH AND WEAKNESS OF THEIR POSITION SO THEY CAN GET TO A POINT WHERE YOU CAN HAVE A MARKET-CLEARING SETTLEMENT. SO CLEARLY IN A LABOR STRIKE, THE WORKER IS GOING TO LOSE WAGES IN ORDER TO GET THE OTHER SIDE TO MOVE TOWARDS ITS SIDE FOR A COMPROMISE. THAT’S WHAT’S GOING ON HERE. THERE’S PAIN THAT WE’RE GOING THROUGH. IN ORDER TO INFLICT THE KIND OF PAIN ON TO CHINA THAT WILL MAKE THEM COMPROMISE AND GET CLOSER TO OUR POSITION.

WAPNER: IT HAS HURT THE MANUFACTURING ECONOMY UNDOUBTEDLY.

BLANKFEIN: IT’S HURT MANUFACTURERS, IT’S HURT FARMERS. NOW, WE SHOULD NATIONALIZE THAT PAIN, WHICH I THINK HAS BEEN SOUGHT HERE. SO IN OTHER WORDS, WHEN YOU GIVE SUBSIDIES AND PAYMENTS TO FARMERS TO COMPENSATE FOR SOME OF THEIR LOSSES, IN EFFECT, YOU’RE NATIONALIZING THE COST OF IT BECAUSE TAX PAYERS, BROADLY, ARE HELPING TO FUND FARMERS AND MANUFACTURERS WHO WOULD OTHERWISE SUFFER ALL BY THEMSELVES AND ABSORB A DISPROPORTIONATE PART OF THAT COST. BUT NEVERTHELESS, I CAN’T SEE ANY OTHER WAY OF BRINGING OUR NEGOTIATING ADVERSARY HERE, CHINA, TO THE TABLE OR CLOSER TO OUR POSITION UNLESS WE CONVINCE THEM THAT THEY HAVE MORE TO LOSE BY RECALCITRANTS THAN THEY DO FROM COOPERATION.

WAPNER: THERE’S OBVIOUSLY A POLITICAL RAMIFICATION FOR THE PRESIDENT, TOO, AS WE GET CLOSER TO THE ELECTION. THERE ARE –

BLANKFEIN: EVERYTHING HAS POLITICAL RAMIFICATIONS. THEY HAVE TO BE DIGESTED.

WAPNER: THERE ARE MORE TARIFFS COMING DOWN THE PIKE IN MID-DECEMBER. GARY COHN, YOUR FORMER COLLEAGUE, WAS ON THE NETWORK YESTERDAY AND SUGGESTED THE PRESIDENT IS GOING TO LOSE CREDIBILITY WITH THE CHINESE IF HE ROLLS THOSE BACK.

BLANKFEIN: WELL, I’M NOT SPEAKING FOR THE PRESIDENT, I’M NOT SPEAKING FOR THE CHINESE. I’M JUST SAYING WHY I UNDERSTAND HAVING TO GO DOWN THE ROAD OF EVEN SUFFERING SOME LOSSES ON YOURSELF AND SOME BURDENS ON YOURSELF ARE NECESSARY. AND AGAIN, WE DON’T OFTEN GET INTO TRADE WARS, BUT WE OFTEN GET INTO LABOR STRIFE, SO I’M MAKING THE ANALOGY SO PEOPLE CAN APPRECIATE WHAT I THINK IS KIND OF A PARALLEL KIND OF THING THAT WE HAVE MORE EXPERIENCE WITH AND WE TAKE FOR GRANTED. AND SO I SEE THE ANALOGY.

WAPNER: LET ME ASK YOU ABOUT THE FED. OBVIOUSLY JAY POWELL HAS ENDURED A TAX FROM THE PRESIDENT WHO IS NOW ARGUING THAT HE BE FINED WITH NEGATIVE INTEREST RATES. HOW DO YOU THINK JAY POWELL HAS DONE? DO YOU THINK THEY’VE BEEN RIGHT IN CUTTING RATES THE WAY THEY HAVE AND WHAT DO YOU MAKE OF THE PRESIDENT’S ATTACKS ON THE FED?

BLANKFEIN: WELL, I WOULD SAY FROM A DIFFERENT PERSPECTIVE, I WISH THE PRESIDENT WOULDN’T ATTACK AN INSTITUTION WHOSE CREDIBILITY IS AN IMPORTANT PART OF ITS INFLUENCE. AND WE WANT AN INFLUENTIAL, RESPECTED FED FOR ALL SORTS OF REASONS THAT ARE CLEAR. ON THE OTHER HAND, IN A WEIRD WAY, IT GIVES JAY POWELL THE OPPORTUNITY TO RESIST THAT AND IN A WAY COME OUT OF THIS WITH THE INSTITUTION HOLDING UP ITS INDEPENDENCE. AND I’M NOT SUGGESTING THAT IT’S GOOD OR NOT SUGGESTING THAT IT IS DESIRABLE, BUT SO FAR JAY POWELL HAS HANDLED HIMSELF VERY, VERY WELL, HIS TEMPERAMENT HAS BEEN FINE AND I THINK HIS RESPONSES HAVE GENERALLY BEEN GOOD. SHOULD HE IN HINDSIGHT HAVE FORGONE THE END OF THE YEAR – LAST YEAR’S INCOME RATE RISE? COULD WE HAVE BEEN — SOME PEOPLE WOULD NOT WANT TO – SHOULD WE HAVE ONE MORE RATE INCREASE MORE OR LESS ISN’T GOING TO DETERMINE MY VIEW OF WHETHER HE’S DOING A GOOD JOB AS LONG AS HE RESPONDS TO THE DATA AND AS LONG AS HE KEEPS HIMSELF INSULATED FROM THE POLITICAL PRESSURES. I WISH THE POLITICAL PRESSURES WEREN’T THERE, BUT I COMMEND HIM FOR RESISTING IT AND AT THE END OF THE DAY, ALTHOUGH THE INSTITUTIONS ARE BEING ATTACKED, THE INSTITUTIONS ARE HOLDING UP.

WAPNER: LET ME ASK YOU ABOUT THE COMPANY YOU USED TO RUN, GOLDMAN SACHS IF I MAY. HOW DO YOU THINK DAVID SOLMOMON IS DOING?

BLANKFEIN: OH MY GOODNESS, I MAKE A – I’M NOT GOING TO COMMENT. I’M A GOOD LEAVER.

WAPNER: A GOOD LEAVER. THERE’S A RECENT ARTICLE –

BLANKFEIN: BUT BY THE WAY, I WILL SAY I KNOW WHO PLAYED THE BIGGEST ROLE IN PUTTING HIM IN THAT JOB AND THAT WAS ME SO I’LL TAKE CREDIT FOR THAT. BUT I’M NOT GOING TO COMMENT ON WHAT HE’S DOING AFTER I LEFT.

WAPNER: OK, LET ME ASK YOU IT THIS WAY THEN. THERE’S A NEW ARTICLE, I DON’T KNOW IF YOU SAW IT IN "FORTUNE" MAGAZINE, "KNOCKING DOWN WALLS AT GOLDMAN SACHS. CAN CEO DAVID SOLOMON GET THE STORIED BANK TO GROW AGAIN?" THE IMPLICATION IS GOLDMAN’S GROWTH HAD SLOWED BYT THE TIME THAT YOU –

BLANKFEIN: WELL, GOLDMAN’S GROWTH HAD SLOWED.

WAPNER: YEAH. I MEAN, WHAT DO YOU MAKE OF THE WAY THAT IT’S FRAMED, THAT SOLOMON’S JOB IS TO GET GOLDMAN GROWING IN WAYS THAT IT WASN’T WHEN YOU LEFT?

BLANKFEIN: YOU KNOW, IT’S OUR JOB. EVERYBODY HAS A DIFFERENT MIX OF BUSINESS. OUR BUSINESS AT GOLDMAN SACHS WAS CLEARLY INVESTMENT BANKING, CAPITAL MARKETS. VERY REACTIVE DEPENDEN, THE MARKET LIKES MORE STABLE INCOME. DON’T FORGET, WE WERE THE MOST RECENT PRIVATE PARTNERSHIP. IN A PRIVATE PARTNERSHIP, YOU CAN MAKE MONEY ONE YEAR AND NOT MAKE MONEY FOR THREE YEARS AND THEN IN THE FIFTH YEAR MAKE A TON OF MONEY AND EVERYBODY’S HAPPY. HERE THERE IS CONSISTENCY. YOU KNOW, SO THERE WAS A NEED TO, I THINK, WHICH DAVID HAS PICKED UP THE CUDGEL FOR, BUILD NEW SOURCES OF REVENUE THAT ARE MORE STABLE, THAT TEND TO BE MORE COUNTER CYCLICAL. THIS WAS STARTED, YOU KNOW, THE MARCH INTO CONSUMER BUSINESSES. WHEN IT STARTED OVER THE LAST COUPLE OF YEARS. AND, YOU KNOW, WE WERE GOOD PARTNERS IN THAT AND NOW HE’S DOING THAT ON HIS OWN. BUT WE WERE – YOU KNOW, OUR BUSINESS, AGAIN, NEEDS TO EVOLVE AND ALWAYS DOES. AND I COMMEND THE EFFORTS TO GROW REVENUE. THAT’S ALWAYS OUR JOB.

WAPNER: LET ME ASK YOU ABOUT THIS QUOTE FROM MIKE MAYO, THE BANKING ANALYST I’M SURE YOU KNOW. “GOLDMAN SACHS WAS A VICTIM OF ITS OWN SUCCESS. THEY DIDN’T FEEL THE SAME NEED TO EVOLVE AS THEIR UNDERPERFORMING PEERS.” WHAT DO YOU MAKE OF THAT? THERE WERE SO MANY BUSINESSES THAT WERE DOING GREAT –

BLANKFEIN: THAT’S AN UNUSUALLY FLATTERING COMMENT FROM MIKE MAYO REFERRING TO OUR SUCCESS.

WAPNER: I THINK HE HAS GOLDMAN STOCK ON AN OUTPERFORM AT THE CURRENT TIME.

BLANKFEIN: THANK YOU, MIKE. LOOK, EVERYBODY IS ALWAYS A VICTIM OF YOUR SUCCESS BECAUSE THINGS WORK AND THEN YOU DON’T HAVE THE SAME MOTIVATION TO CORRECT OR CHANGE THINGS. LOOK, ONE OF THE BIG ACHEIVEMENTS IS WE STAYED INTACT THROUGH THE FINANCIAL CRISIS WHICH WAS A BIG BURDEN ON ALL FINANCIAL INSTITUTIONS, BUT PARTICULARLY ONE THAT WAS SO GEARED, ALMOST EXCLUSIVELY GEARED, TOWARD ADVISORY WORK AND CAPITAL MARKETS ACTIVITY AS OPPOSED TO COMMERCIAL LENDING AND DEPOSIT TAKING, WHICH IS GENERALLY MORE STABLE, SAFER ACTIVITIES. WE WEREN’T EVEN IN THOSE BUSINESSES. SO CLEARLY THERE HAS BEEN A NEED TO EVOLVE CERTAIN OTHER THINGS IN DIFFERENT PARTS OF THE KIND OF CYCLE ARE GOING TO BENEFIT ONE BUSINESS OVER ANOTHER. I’M PROUD OF OUR FIRM, I’M PROUD OF THE GREAT PEOPLE THAT WE HAVE WORKING THERE. WE STILL ATTRACT AND RETAIN THE BEST TALENT. I FEEL VERY GOOD ABOUT IT BUT THERE’S ALWAYS A NEED TO IMPROVE THINGS AND TO MOVE ON AND TO ALWAYS, ALWAYS, ALWAYS GROW REVENUE AND SOURCES OF OPPORTUNITY.

WAPNER: ON THAT NOTE, THE 1MBD THING. WHICH IS STILL NOT FULLY SETTLED. HOW DO YOU THINK ABOUT THAT AS IT RELATES TO YOUR OWN LEGACY THERE?

BLANKFEIN: WELL, ANYTHING THAT HAPPENS ON MY WATCH I GUESS – NOT I GUESS – IS CLEARLY PART OF MY LEGACY. THAT WILL PLAY THROUGH. THERE’S 50 THINGS THAT HAPPENED.

WAPNER: THIS IS A BIG ONE, THOUGH.

BLANKFEIN: LOOK, YEAH IT’S A BIG ONE. WE’VE HAD A LOT OF THINGS THAT GO ON. IT WILL WORK ITS WAY THROUGH. IT STILL IN THE PROCESS OF WORKING THROUGH. WE OBVIOUSLY HAD, AND THERE IS NO CONTESTING, WE HAD A BAD EGG OUT THERE. THEN THE QUESTION FOR THE INSTITUTION BECOMES – AND EVERYBODY FROM TIME TO TIME WILL HAVE A BAD EGG. WE HAVE TENS OF THOUSANDS OF PEOPLE. WE HOPE THAT EVERYBODY IS PURE OF HEART, IT DOESN’T ALWAYS WORK OUT. AND THEN THE INSTITUTIONAL TEST IS DO WE HAVE THE RIGHT PROCESSES AND PROCEDURES, COMPLIANCE AND CULTURE THAT SHOULD HAVE, EVEN THOUGH IT SLIPPED THROUGH THE CRACKS THIS TIME, HOW MUCH AT FAULT WERE WE IN ALLOWING THIS TO HAPPEN? AND THAT’S WHAT GOES ON AND THAT IS WHAT PLAYS OUT HERE. YOU KNOW, I HAVE CONFIDENCE IN OUR INSTITUTION. I THINK WE ARE ON THE RIGHT SIDE OF THOSE CULTURE AND CHARACTERISTICS AND COMPLIANCE THINGS. BUT CLEARLY, THERE WAS A BAD OUTCOME. AND WHEN THERE IS A BAD OUTCOME, YOU LOOK FOR FLAWS AND THAT IS WHAT THE PROCESS IS AND WE’LL MOVE ON. I CAN TELL YOU THE CRISIS – WE DON’T HAVE ENOUGH TIME LEFT TO ENUMERATE ALL THESE THINGS – GOLDMAN SACHS IS BIG ENOUGH AND INFLUENTIAL ENOUGH, AND IN ENOUGH PLACES, THERE’S HARDLY ANYTHING THAT CAN GO WRONG ANYWHERE IN THE WORLD WHERE WE’RE NOT INFLUENCED BY IT, INVOLVED IN IT, OFTEN VERY, VERY INVOLVED IN IT. AND TO BE IN MY SEAT, THE SEAT I OCCUPIED, THE SEAT THAT MY SUCCESSOR NOW OCCUPIES, MEANS YOU HAVE TO WORK THROUGH THESE THINGS. AND WORKING THROUGH THESE THINGS ALSO MEANS YOU HAVE TO MAKE THE KINDS OF CHANGES AND RESPONSES TO MINIMIZE THE CHANCES THAT BAD OUTCOMES HAPPEN AGAIN.

WAPNER: I KNOW YOU HAVE TO RUN TO THE AIRPORT, SO I’M GOING TO LET YOU GO WITH A FINAL QUESTION. THE MARKETS ARE AT RECORD HIGHS AND WE’RE SETTING NEW HIGHS ALMOST EVERY DAY IT SEEMS. WHAT’S YOUR VIEW OF THE MARKET? ARE YOU COMFORTABLE WITH WHERE STOCKS ARE?

BLANKFEIN: OH MY GOD, I DON’T THINK I’VE BEEN COMFORTABLE SINCE 37 YEARS AGO WHEN I WENT OVER TO FINANCE. I’M ALWAYS LOOKING AROUND EVERY CORNER, ALWAYS WAITING FOR IT. AND I WON’T HEAR THE ONE THAT IS, ALTHOUGH AFTER IT HAPPENS, 80% OF THE PEOPLE OUT THERE WILL THINK I KNEW IN ADVANCE AND THE OTHER 20% WILL THINK WE CAUSED IT. SO THE FACT OF THE MATTER IS – BUT IF YOU LOOK AT IT AND YOU ASK ME WHAT IS MY BEST SENSE, LOW INTEREST RATES, RELATIVELY HIGH GROWTH, NO DEMAND TO RAISE THOSE INTEREST RATES. AND SO I’D SAY THERE’S A VERY, VERY GOOD MACRO BACKDROP. WHERE ARE – NOW, THE BIG RISK IS YOU TALKED ABOUT LOW INTEREST RATES. WELL, CLEARLY IF YOU HAVE A COMMODITY AND YOU ATTACH A ZERO PRICE TO IT, HOW DOES THAT GET ALLOCATED EFFICIENTLY AND SAFELY? AND SO IS CAPITAL GOING INTO WRONG PLACES? ARE THERE BUBBLES BEING FORMED? I DON’T SEE THEM BUT YOU NEVER DO UNTIL AFTER THE FACT WHEN EVERYBODY IN HINDSIGHT REMEMBERS HAVING SEEN THEM. COULD IT BE CREDIT? BUT THAT KIND OF – DOESN’T FEEL THAT WAY MAYBE. REAL ESTATE? THAT’S KIND OF COME DOWN. OTHER KINDS OF ASSET PRICES, IPOs, TECH, HIGH PRICES WITH NO REVENUE, THAT’S KIND OF DEFLATED –

WAPNER: CORRECTED ITSELF SOMEWHAT

BLANKFEIN: SO WHAT’S GOING TO HAPPEN THAT’S GOING TO BURST A BUBBLE AND CREATE A HUGE KIND OF EXPLOSION? I DON’T SEE IT BUT BECAUSE I DON’T SEE IT DOESN’T MEAN IT’S NOT THERE.

WAPNER: IMPEACHMENT?

BLANKFEIN: YOU KNOW, I SAY THAT EVEN THAT PROCESS, I THINK STATISTICALLY IT’S VERY LIKELY THAT THERE IS A FAVORABLE OR POSITIVE VOTE ON IMPEACHMENT AND VERY, VERY UNLIKELY THAT THERE’S A VOTE ON REMOVAL. SO I DON’T THINK THE FINANCIAL MARKETS ARE REALLY GETTING SET. IF THAT FORMULATION CHANGES, THEN OVER TIME THAT RISK WILL ACCRETE INTO THE MARKET AND THE MARKET WILL SLOWLY ADJUST. THE ONLY TIME YOU GET A REAL BURST AND AN EXPLOSION IS A SUDDEN SURPRISE AND A SUDDEN CHANGE IN THE – THAT WASN’T ANTICIPATED FOR WHICH THE ADJUSTMENT WASN’T MADE. I’LL GIVE YOU AN EXAMPLE OF THAT RECENTLY WAS WHEN DONALD TRUMP GOT ELECTED WHEN EVERYBODY THOUGHT HILLARY CLINTON WAS GOING TO GET ELECTED. AND SO THEN GOING INTO THAT ELECTION, NOBODY SAW – EVERYBODY WAS THINKING HIGHER TAXES, POSSIBLY MORE REGULATION AND ALL OF A SUDDEN OVERNIGHT LOWER TAXES, LESS REGULATION AND THAT ADJUSTMENT WAS KIND OF A RADICAL REGULATION. NOW SOME PEOPLE LIKE THAT BECAUSE STOCKS WENT UP NOT DOWN ON THAT, BUT THE REVERSE OF THAT COULD HAPPEN. THAT KIND OF SURPRISE.

WAPNER: THANK YOU FOR BEING SO GENEROUS WITH YOUR TIME TODAY. IT’S NICE TO SEE YOU AND SPEND THIS TIME WITH YOU.

BLANKFEIN: OH THANK YOU, SCOTT.

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