Goldman unveils checks on conflicts in bid to fix image

After dozens of meetings with executives and regulators, 100,000 hours of employee training and an immeasurable amount of public grief, Goldman Sachs’ Lloyd Blankfein claimed success in putting the bank and his legacy as chief executive back on track.

At Goldman’s annual meeting, Blankfein unveiled details of a three-year review and overhaul of the bank’s practices in dealing with clients, following high-profile missteps that tarnished its reputation in the aftermath of the financial crisis. The overhaul imposes checks, including through elabourate computerized systems, to ensure that the bank is fair to clients and avoids conflicts, such as being on different sides of the same trade.

Goldman’s changes do not appear to go beyond the kind of committee reviews that other Wall Street firms now do, executives at two rival banks said. But they added the use of computerized analyses to detect unfair deals could make the system more effective than rivals’ at catching potential pitfalls, even if it costs them some business.

“They want to get their reputation back,” said Roy Smith, a professor at New York University’s Stern School of Business. “They know that means giving up some business.”

Goldman faced public outrage in the aftermath of the 2008 financial crisis over accusations, including a US Securities and Exchange Commission lawsuit, that it had treated clients improperly. Blankfein and other executives also faced intense grilling on Capitol Hill, which deeply embarrassed its chief executive.

After serving as chief executive since June 2006 and steering the bank through the financial crisis, the 58-year-old Blankfein does not want to leave his post until he feels the bank’s reputation and his own legacy are fully restored, people familiar with the situation said.