David Solomon, chief executive officer of Goldman Sachs Group Inc., during an event on the sidelines on day three of the World Economic Forum (WEF) in Davos, Switzerland, on Thursday, Jan. 19, 2023.
Stefan Wermuth | Bloomberg | Getty Images
When David Solomon was chosen to succeed Lloyd Blankfein as Goldman Sachs CEO in early 2018, a spasm of fear ran through the bankers working on a modest enterprise known as Marcus.
The man who lost out to Solomon, Harvey Schwartz, was one of several original backers of the firm’s foray into consumer banking and was often seen pacing the floor in Goldman’s New York headquarters where it was being built. Would Solomon kill the nascent project?
The executives were elated when Solomon soon embraced the business.
Their relief was short-lived, however. That’s because many of the decisions Solomon made over the next four years — along with aspects of the firm’s hard-charging, ego-driven culture — ultimately led to the collapse of Goldman’s consumer ambitions, according to a dozen people with knowledge of the matter.
The idea behind Marcus — the transformation of a Wall Street powerhouse into a Main Street player that could take on giants like Jamie Dimon’s JPMorgan Chase — captivated the financial world from the start. Within three years of its 2016 launch, Marcus — a nod to the first name of Goldman’s founder— attracted $50 billion in valuable deposits, a growing lending business and had emerged victorious from intense competition among banks to issue a credit card to Apple’s many iPhone users.
Solomon at risk?
But as Marcus morphed from a side project to a focal point for investors hungry for a growth story, the business rapidly expanded and ultimately buckled under the weight of Solomon’s ambitions. Late last year, Solomon capitulated to demands to rein in the business, splitting it apart in a reorganization, killing its inaugural loan product and shelving an expensive checking account.
The episode comes at a sensitive time…
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