There were periods of time where you'd almost blow a whistle and say we are now in risk management mode. I just want to know contingency planning. Don't tell me about the probability or improbability of something happens because on certain moments you can throw that all out the window. All assets become correlated. It doesn't matter what you thought the probabilities were given enough time. It's not that anything can happen, it's that everything will happen.
My guest this week is Lloyd Blankfein. He served as the chairman and CEO of Goldman Sachs during the global financial crisis of 2008 and the years that followed on Wall Street. He's now out with a new memoir. It's called Streetwise: Getting to and Through Goldman Sachs. Lloyd Blankfein, welcome to the show. How are you?
Good. Preet, thank you very much for having me.
So, we're recording this. I like to timestamp it because it doesn't come out for a couple of days. March 9th, 2026, about lunchtime. You have to do that these days in the Trump era because things change so rapidly. I think the pace has accelerated. So we're at war with Iran.
Kind of war. I mean technically not a war.
When you have something that's so volatile as that, how do you assess the risk? How do people get advised about their investments in the economy and the market when you have something unpredictable?
It really is unpredictable. And if we had a firm prediction, I wouldn't put much stock in it because, what was that? You know, it's great to have a plan. As a fighter, it's great to have a plan until you get punched in the face and there's always surprises. And I would say if you had a plan, you'd have to have 80 plans because you'd have to put out and draw all the contingencies if this happened or that didn't happen. But I would say that and I'm watching TV and there are people going on and said we've really accelerated the world. Are we prepared for the con? I'm thinking to myself, are we worried that they're going to get mad at us if we do something more? I think they were pretty committed to being as mischievous as they could in the world and specifically against the interests of the United States and the West and they were going to keep on going and when they got beaten up they were going to go back and keep doing it again. So, at the end of the day, we'll find out. I mean, this could devolve. But I think right now today, we're better off than we were because we're certainly no less motivated and it'd be hard to be more motivated to commit mischief. They just have less capacity, a lot less capacity to do it. And I think that that's a good thing. And that has been accomplished. I also think of another kind of thought experiment here, which is what if we do? You ever go back? They've been out of the news for a long time and they really don't wreak havoc around the greater world. They're kind of a low regional threat. Take North Korea.
Yeah. When they're in the news again and when they're threatening and they're launching, you know, missiles over into the Sea of Japan and threatening the United States. Don't we wish we had done something about that when we still could do something about it?
Before the nukes. Before the nukes.
And you wring your hands and they don't call you up and say, you know, you have five minutes to go and then there's a capacity then there's a do you take it because they have all those missiles pointed at Seoul and so you don't do it. You don't do it. You don't do it and now it's too late. Don't you, when you listen to those stories, don't you wish you can go back in time and fix that before it was too late?
I think about time travel often.
There are a lot of things I'd like to fix.
Well, I think about so much traveling. I just think about the regret I have and whether that informs the future.
And so you think it was a strong move forward for geopolitics?
I think it was a strong move. The idea though that this is a good thing may not age well. You know, we're sitting here at a moment in time. We don't know how it goes. But life is about probabilities. And it could work out badly and have been a good choice to have made now. It just didn't work out well. Or it could work out well and have been a mistake. My algorithm is not necessarily one variable: are they proximate, are they so close to getting nukes, do we have time before they go nuclearized? To me, my algorithm includes: are they close to it, what's their motivation to keep on getting it, and is this a time where you could do something because their air defenses are weak, civilian population is in rebellion, our enemies and their allies are distracted. So that some combination made this as ripe an opportunity as we would ever have of doing something that if we missed we'd look back and regret.
Let me play mild devil's advocate for a moment. Choices are not always binary with something as complicated as starting a war with Iran. It's not just do you do something or not do something. So for example, some people might argue with respect to Iran, yeah, the strikes maybe were worthwhile, taking how many was maybe worthwhile, but how much thoughtfulness went into the preparation for the people to take back their country? And the experts that I hear, and I'm not an expert on Iran, might say, 'Yeah, good move if you had laid the foundation.' Which did not happen. So, it looks like more of an off-the-cuff pugilistic act than a thoughtful, reasoned long-term strategy. It looks like tactics more than strategy. Maybe not even tactics. Is that a fair criticism?
I don't think so. Not because I think you're wrong. I just don't know. And I think you don't know.
I'm relying on the experts who keep lettering this.
You know, but it depends which news station you're watching and whose experts you're listening to. I don't know the answer to that.
Yeah. There's on some matters maybe not on this one and I'm going to come to one in a moment but when we talk about economists and how wrong they are often consensus is developed. You know, again we're a polarized country. You can turn on Fox, you can turn on CNN and you think you're listening to different eras and different countries and different planets.
Sometimes you turn on Fox today and Fox a year ago and you think you're in a different era.
And a lot of MAGA folks said we like this guy because he's not going to go to war with Iran. You know who said that? This guy said that.
No, I understand. The right and the left are at war with their own consensus. And so we're living in that area. I'm not arguing the point that you're wrong. I'm just arguing the point that I don't know.
And my best guess is that you don't know. And when you listen, there's a lot of selective perception that goes on in the world. People listen to people who agree with them. I just don't know. So I don't know. I know that if I were doing this, I would have... I am in the contingency planning business as you know, from the second I wake up. And I wouldn't be... but I don't know that they're not. In other words, when I look, I live through... I think that the military over the last couple of years had been very capable. Don't forget, my zeitgeist was Jimmy Carter launching helicopters into the desert without sand filters and having them run into each other and fall down. I think they've been pretty... I think these people have shown pretty much competence. And again, I don't think Pete Hegseth is doing the planning. I think that he has... Well, it's not news. It's a question. I don't know. But I'm willing to say what I don't know.
Well, that's the best news I've heard all day.
Yeah. No, so am I. And it's most things I don't know about.
Going back to the economy, how's this going to shape out?
Well, if it's resolved soon, it will be a blip like most of these macro events that go.
So, it will be temporary if that's the case.
Yes. Nobody will use the word transitory anymore because that's now been expunged from the vocabulary. But it'll be temporary as these things usually have tended to be. But if this is a long drawn out shutdown of the straits and as a result there's no place to put oil and so they've run out of storage and they've run out of ships to put it on. They have to shut down. Then it'll take a while to put up. You'll have higher energy prices and threat of economic slowdown as a result of it. It'll be inflationary on the one hand and it'll be bad for growth on the other and so everyone will be talking about stagflation which is the worst possibility which cuts down the optionality of the Fed. That won't be good. That is a possibility. It's not my base case. I think if things are really bad in the short term as we sit here today and the price of oil at least the last time I looked at it was up over $100. Maybe by the time this is shown it'll be 180 or 80. I don't know. But as we sit here today, there's just a lot of uncertainty and I would be contingency planning for both sides of it.
Yeah, of course. By the way, in the risk management business, which I had to do for a long time, I had to worry about the eventuality that things might work out well, right? Which is highly consequential. There's a million people out there who've gotten out of positions, bought hedges, invested a lot of money in protecting that protection. If things work out, that protection they paid a lot of money for will be worth zero. It's highly consequential to people on both sides. That's the nature of volatility.
Were there things that the government or the Treasury Secretary or the Energy Department or others should they have done to prepare us for that or to prepare the American public for that?
I think if you had a long time frame, I think the regret would have to be that they didn't fill the strategic petroleum reserve.
Yeah. So what... that was taken down in the prior administration to lower cost blah blah blah.
And you know everybody's loathed because everybody likes lower oil prices and if you're a president trying to fight inflation which every president is the last thing you want to do is compete in the marketplace and bid up the price of oil while you're feeling so everybody defers that gratification. I bet in hindsight I'm sure they wish they hadn't.
So you mentioned inflation. How are we doing on inflation?
You know, it's sticky. It's sticky at levels that are survivable.
What's survivable? Like what's the range of survivable inflation?
You know, we've been granted a target by the Fed and so that's the relevant number which is 2% and it's been over that for at least about six years now. It was way over it for understandable reasons during the COVID and because of supply chains which by the way turned out to be transitional even though it wasn't as quick as people thought but it's still sticky at too high a level so I think the Fed's preference would be to keep a restrictive economy to get inflation back but not at the expense of their other side of their mandate which is full employment which is GDP related. And so they're going to be in a bit of a quandary probably. My guess is they do nothing and watch it for a while and see how things resolve.
Are you worried about the independence of the Fed?
Yes. And when you say am I worried, I would say that the independence of the Fed is absolutely essential and there is no value to undermining it. So why does he do it? You know, I think my guess and I have no degree in psychiatry and I think you'd need a specialist to figure it all out. But I think he's gotten pretty far in trying to influence people to do things that he thought was a good idea. The reason why it's a bad idea, universally bad idea, is we are a big borrower in the world. Our creditors are worried about our default. How does the US default when people lend us money? How do we default to our creditors? We can print dollars so we can always return the dollars that we borrow from them. The question is always going to be what are those dollars going to be worth? So the way the US defaults on its debt is by undermining the value of the dollar, inflating the currency so the purchasing power isn't there. The guardian of our creditors' interests is the Federal Reserve which keeps, which is anti-inflation and preserves the value of the dollar in that respect. And if they lose that protection, our creditors are either going to only lend to us at a much higher price or they're going to stop lending to us altogether. Undermining the Fed is foolish. The Fed's independence is foolish.
How do you think that'll play out?
I think people will take... they have their office for a long... I think the Fed will protect its independence. Are they in the political dialogue? Do they read the newspapers every day? Are they influenceable? Yeah. But by and large, people don't always know if they're drifting in a direction because they want to read good things about themselves opposed to bad things about themselves. I'm sure the political arguments and charges has something of an influence, but I think the Fed... everyone has an interest in preserving the Fed. You know, in some ways the Fed is a lot like the Supreme Court. Obviously, the Supreme Court is constitutional. The Fed is legislative.
Do you think there'll be an uprising in the streets over the Fed? Do you think a lot of people are following the importance? It's a little more esoteric because you're dealing with the economy, but you know something who would necessarily think you'd have an uprising over the Supreme Court. Yet, we had that in...
FDR was an awfully popular president and he got killed on his court packing scheme. And that was the... I can't think of another way where he got singed like that by going after that institution. And I think going after the Fed, you saw the backlash from even his core Republican base didn't like going after the independence of the Fed.
We talked... so combining the Supreme Court and the economy for a moment. There was an important decision about tariffs and the authority of the president to impose the tariffs he imposed through the IEEPA statute.
Pleased with that decision. I'm pleased with that decision because I'm pleased that there was an affirmation of the separation of powers and what I think is the black letter rule of the constitution.
As a lapsed lawyer you appreciate it.
Yes, I appreciate it especially, but I don't know, I think I'd appreciate it just as much as a citizen.
Do you maintain your bar membership?
You do? Well, you have a retired status, so you have to, you know...
Yes, I'm a member of the bar and of California, too.
Do you do gigs? Could I hire you?
Oh, you could hire me. I would have to reactivate.
You'd have to run conflict. A lot of conflicts you would have.
But you know, you could take me out of the law, but you can't take the law out of me.
That's a very important thing. Did you ever think, you know, this is off, but you know, my brother is a quote unquote lapsed lawyer and became an entrepreneur of some success and I've asked him the question, did he think that it would have been better to have gotten a business degree? And he says, 'No, the law degree serves him better.' How do you feel about that?
Well, you know, Two Roads Diverge in Yellow Wood. I didn't take both paths, so I can't compare the two. But there was a lot of content and a lot of substance. I always thought of business school as kind of a socialization into the business world and not as much hard driven content.
Our business school listeners are all going to write in.
Yeah. What the heck? Go ahead. Be my guest. But I would say that it would have been better if I just gone to work all the things because I got a lot. Yeah. Look, you are who you are. As Popeye said, I am what I am. I am a lawyer. I went through that. I don't know how I would be if I wasn't that. But I don't know if learning civil procedure and conflicts of law is really helping me more than I'm sure that wasn't. But there's a lot of ways of having discipline.
Were you already as rigorous a thinker and problem solver before law school as after?
I don't... it's hard to go back and know. But by the way, law school was three years. I'm sure I would have evolved in those three years. It's not a question of whether I had gotten frozen in an iceberg. No, but I'm saying it's not as if I had gotten frozen in an iceberg, I would otherwise while away the time doing nothing. It's those three years in law school versus three years in some other activity.
I'm not advocating for law school.
I don't know if people know this. Lloyd Blankfein here began his career.
Not a good you think for a man of action like myself.
Well, no. I've always said and I have a lot of friends who are going to be annoyed by this... I want to be careful. I'm going to offend by implications people. The smartest lawyers are often tax lawyers and antitrust lawyers. I think it's very difficult.
So you chose an area that some might say was not the most scintillating. Fairly rigorous.
It's hard and complicated. It's hard and it's complicated and my motivation probably was more commercial. I really... I'd gone through school. I had accumulated a lot of debt. I wanted to make sure I had a good job and that was esoteric and hard and really in short supply. The other thing is that the tax lawyer is there to structure transactions but doesn't have to sit there and document it. So there's a sense of being an expert like a specialist that comes in. And there was something alluring about that and the life was because you got to work. If you were a corporate lawyer assigned to a particular transaction, you trudged through that forever. If you were the tax lawyer, you dipped in, helped restructuring, and then did four other things on the same day. So, I thought it was attractive in that way. But honestly, it was also the commercial idea that that was an important skill set that a lot of people didn't want to do and I was willing to do it. And it turns out, how wrong was I because I wasn't willing. We really weren't doing it, but it seemed like a good idea at the time.
You were wrong. You did one a week ago on Bloomberg and they gave it the title 'Lloyd Blankfein says the market is due for a reckoning,' but embedded in that you said, quote, 'I think we shouldn't have blue companies and red companies,' which I found very interesting.
Well, those are two different things.
I know. So, I'm going to start with that one. What do you mean by blue companies and red companies? I think people are shoving microphones in in this polarized world that we're in. Everyone who's standing still for more than 4 seconds has a microphone shoved into his face and say, 'What do you think about this issue or that issue?' Like the beginning of our conversation where I say, you know, you're saying something and characterizing as obvious except to the other half of the country.
And I don't think... I think there are a lot of things that should be decided and opinions rendered and should be in the political sector. I don't think everything that gets debated in the political sector has to go into the commercial sector.
So in a different context or a related context, you're not of the view that a CEO of a company must make a public statement about every issue of the day.
100%. Correct. Now there are some things where you not only can but you should. So for example...
So how do you pick that? That's the tricky part because when then the third time when you don't speak people infer...
You know, it is kind of tricky and sometimes I'll give you my set of rules and you could see how permeable that membrane is because I would say in areas in which your job gives you special expertise. So if they're about to have a government shutdown or they can't pass a budget or tariffs issue and you're at Goldman Sachs and you live in the economic world and people reasonably think your statement about that is pretty expert. You can tell what you think of the consequence because that's important information that you have if not exclusively then selectively. Another area where you should get involved as a CEO, you're the champion of your people. So in their jobs and so I took a very prominent and strong stand for example on marriage equality because we had people we're always moving people around the world their partners couldn't always move with them, couldn't always get health care for the partners in the same kind of way and in order for people to be themselves and do their jobs I took a stand on that.
What about when Hamas kills Israelis on October 7th?
I don't know that that's a... you know as an individual... I don't know. That's... Oh, no, no, no. I started out by saying it's a tricky thing. I would commiserate and of course, if I were in my old job, I'd have people who were living in Israel. And so, I would be there and I'd be talking about the horror of it. And to me, that's so overwhelmingly clear. I don't think there's a real cost in terms of taking a position. But take harder things. You know, some of the commercial banks said they're not going to finance gun companies. Well, half the country, probably more than half the country likes the Second Amendment. And so, I'd say that gets tricky. Now, in the social circles I hang in, that's not a very tricky question here in very blue New York City. But you go a little bit west of New York or east of California and it becomes a lot trickier question. Why? What is your expertise? The other thing I think of is the only reason why people are interested in a CEO's opinion anyway is because of the platform they're in. Maybe some people have risen past the platform and have important status in and of themselves. But I think you have a duty to your company and your shareholders and these are issues for the political sector not for the commercial sector. So again, if you have special expertise, to be the champion of your people and that gets very loose around people, but to go inject yourself in every social debate, political debate is... and so I shorten it to say I don't think there should be blue companies or red companies.
I think that's a fair point. So going back to the headline, the market is due for a reckoning. When, sir? Everybody wants to know when.
Yeah. You know, I set my alarm but had an indeterminate hour on it. I would say that and if my tenure was any indication, we always had the crisis of the century like once every four or five years. You know, I could take, you know, from the dotcom bubble and long-term capital and the Russian default and it just seemed the crisis of the century all that time. And one of the things that happens then is when you have that kind of a reckoning and people are forced to disgorge and sell positions and raise cash, you suddenly find all the assets you may have accumulated on your balance sheet. You find out the true value of those things because you have to sell them. And the only time you really know the value of something is when you find a price at which there's a buyer to buy them. And that hasn't happened for a long time for a lot of assets. We haven't had a kind of reckoning where the market has completely dumped. People have been scared to death and have sold anything they could sell. We haven't had that in a long time. So, and you quote from the Godfather, right? Every 10 years. Well, it's got to be a bloody war. Yes. You know, when they say, when one of the capos is trying to assuage Mike and said, 'Okay, we can handle this gang war because at the end of the day, they're good because a lot of grudges build up over the 10 years and we have to let them people give vent to them so we can clear them out.' And I'd say that we haven't had a good gang war in the market for a long time. And then a lot of things have built. Look, we're coming off a period where I know, and not to get esoteric, but a lot of inventory has been built up on the balance sheets of private equity. We're talking about private credit. These things have built up over a period of time. We've just gotten through a market with equities on record high levels with a very, very favorable financing environment and a lot still hasn't been sold really. So is it going to be easier to do that if the market craters or if financial conditions get so bad that no one is lending anymore into the market? So I think the longer you wait, the longer the amount of time between such reckonings, the more difficult and painful it becomes because more... to just switch metaphors, you accumulate a lot of kindling on the floor of the forest.
Yeah. And at some point there'll be a spark that if the kindling wasn't there, it wouldn't have made a difference. But with the kindling there, it's going to set the fire. It might set the forest on fire.
People who listen to this podcast on a regular basis know I bring up this point frequently on this issue of expertise in economics and in forecasting. You're very good to say you don't know. Lots of people hedge. Nobody in any profession where there's some chance involved or mother nature or god or luck or fortuity involved say something is a guarantee. Economists are kind of the same other than in recent times I can't remember if it was '22 or I think '22 where every economist and every financial periodical to a great degree predicted recession and it never came.
How should we think about the prognosticators on the economy?
I think you should think about it the same way I think about it. I didn't predict that. I would say look, in our... I think was it Bloomberg or The Economist said 100% chance. Who says 100% chance about anything? Look, there were two sides to my business life at Goldman when it comes to markets. There was a let's bet and try to get things right and steer ourselves. The other side is other people's transactions. We could decide how long we keep a position, when to hedge it or not, where we want to have a view of what we think is going to happen. Then there were periods of time where you'd almost blow a whistle and say we are now in risk management mode where I just want to know contingency planning. What if this... don't tell me about the probability or improbability of something happens because on certain moments you can throw that all out the window. All assets become correlated. It doesn't matter what you thought the probabilities were. Given enough time, it's not that anything can happen. It's that everything will happen. So I'd say in risk management, don't tell me your opinion. Just tell me what could happen and what's your contingency plan if that happens. And I think we're in kind of that mode now. I don't know if the strait's going to be closed. I don't know if oil is going to go back. By the way, oil could be 60 or 160 depending on what happens. I think you have to have contingency planning for that to happen and to stand up and say in a moment like this, here's what I think. I think for part of the business, people should do that. But when you're trying to manage your risk, the last thing I want to hear is people's opinions about the future. And with economists, look, economists are weighing 800 variables. Each one changes it from negative to positive. So you get 799 wrong, and the 800th variable that they didn't get right turns it all into a coin flip. Yeah. Now, where were we? You asking, 'So, why the book? Why the book?'
Yeah. You know, now I started, you know, I was out. COVID hits. So, I started get to the irony of I leave so I don't have to travel. And 2 minutes after I leave, nobody has to travel. I said...
Wait a minute. Is that causation or correlation?
Yeah. What am I, you know, it's a freakish surprise just like the markets. So, you just don't know. And so, it was a black swan event. And so, I say, "Hey, got by the clocks." You know, I was only kidding. But anyway, I had time on my hands. I like to write and I like to write short stuff and so if I thought I was going to end up with a memoir that I was going to publish I never would have started. It was just too formidable. But you know I started doing little things. I started writing chapters.
Did you write it chronologically?
I did and then I switched. I wrote it chronologically because the early days were easy because anybody who could possibly contradict me was dead or non-compassment when I got to...
So how much of that early part is made up, sir?
Well, none of it's all made up, but I just didn't have to deal with challenges the way you challenge me. You know, they're not right, but it's still irritating. And so I didn't have to face that. And then when I got to things like working my way through Goldman Sachs and, you know, the financial crisis, 15, you know, other crises along the way, you know, I said, "Wow, this is a little harder." So, I said, "I'll deal with it." The next day, I put my pen down. I picked it up three years later. That's when I got some help. Also, I got a guy to help work with me and structure.
You got to do that. That's helpful.
Yeah. Because I needed the discipline. And then it ended up being kind of fun.
Did you... so I'm fascinated by the foundation... your foundation in life which I want to talk about and you spent a lot of time on it. So you grew up not wealthy.
