Former Goldman CEO Lloyd Blankfein on reopening the economy, PPP loans and more

🎥 May 04, 2020 📺 CNBC Television ⏱ 19m 👁 119494 views

Lloyd Blankfein, former Goldman Sachs chairman and CEO, joins "Squawk Box" to discuss reopening the economy, the latest jobless claim numbers, the small business loan program, the banking sector and more. For more coronavirus live updates: https://www.cnbc.com/2020/05/04/coron... For access to live and exclusive video from CNBC subscribe to CNBC PRO: https://cnb.cx/2JdMwO7 » Subscribe to CNBC TV: https://cnb.cx/SubscribeCNBCtelevision » Subscribe to CNBC: https://cnb.cx/SubscribeCNBC » Subscribe to CNBC Classic: https://cnb.cx/SubscribeCNBCclassic Turn to CNBC TV for the latest stock...

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About Lloyd Blankfein

Lloyd Blankfein released a memoir titled *Streetwise: Getting to and Through Goldman Sachs* in April 2026 and conducted a series of media interviews to promote the book. In these appearances, he discussed his upbringing in public housing in Brooklyn, his experience as an outsider at Harvard, and his rise to become CEO of Goldman Sachs. On the subject of higher education, Blankfein said he believes young people should not skip college to chase money and fame. He also commented on Harvard, stating that governmental scrutiny caused the university to make "course corrections." In multiple interviews, Blankfein argued that the financial system is accumulating risk that could lead to a future crisis. He used the metaphor of "dry tinder" building up on a forest floor, stating that a long period without a major crisis has led to complacency and the overvaluation of private assets. Blankfein said the next crisis would be harder to contain than 2008 because reforms have spread risk beyond the reach of regulators, though he noted that such distributed risk makes the system safer for smaller shocks. He attributed Goldman's survival of the 2008 crisis to its rigorous mark-to-market accounting and risk culture, and stated that if other banks had managed themselves the same way, there would not have been a banking crisis.

Source: AI-verified profile updated from Lloyd Blankfein's recent appearances. Browse all interviews →

Transcript (20 segments)

✨ AI-enhanced transcript with speaker attribution

Becky Quick0:00

You have taken to Twitter. I think you were a little bit late, but you've gotten really good at it really fast. And I've gone back to the beginning of when this was happening and seen all your comments. And just to give you a thrill and compliment your way, they're always very measured and productive and really not a waste of time for what you've gone through. I want to start by asking you, as a risk manager, one of the best, and I really believe that, do you think the way we're approaching reopening the country is feasible in terms of both minimizing risk and getting the economy open again?

Lloyd Blankfein0:47

I think we're experimenting here. The states, from the beginning of the Federalist period, have a federal structure. States make their own rules, and when it was first talked about, the states were supposed to be kind of laboratories. So states can do different things, and then the outcomes would be noted and people would move towards the best practices. For me, wanting to value life and the way it's been juxtaposed between life versus economics, I'd be very reluctant to accede to anything, but I think the right thing to do is to push in the direction of opening up the economy now. Some people express this as dollars versus health, but that's not fair. It's really health helps because poverty and GDP are also health issues. Life expectancy goes down if we have a bad economy and GDP drops by a lot. I wouldn't open up without following CDC guidelines, but the broad stroke of shutting everything down is something we should push against now, and I think the tide is rising in that direction. I wasn't as critical as some of the states that were leaning into that movement.

Becky Quick2:13

You saw the lows in the markets, and you weren't quite as negative about the prospects for the future. I don't know if you're surprised that the markets have recovered at this point. I'm trying to glean your thoughts through some of the tweets you made at the time.

Lloyd Blankfein2:37

I think we're in the neighborhood. It's tough to forecast. We're in the realm of contingency planning. Neel Kashkari, former Goldman Sachs alum, said we really don't know the damage that's been done because unemployment numbers are understated since some people aren't looking for jobs. I'm not sure that's really the damage. We know we shut the economy down. The damage would be businesses that are shut forever, jobs that don't return, and we don't really know that from the unemployment number. I'm sure there's some correlation between jobs lost now and fewer jobs coming back, but we really don't know. As a manager, you have to plan for a number of contingencies. Generally, at the depth, an unresolved crisis is always horrible because your mind extrapolates to new dimensions, and they're all bad. But people are resilient and flexible. Warren Buffett says it's everything. Americans adapt. I'm not Pollyannaish, my job didn't allow me to be, but you ignore history if you don't see that we're quite adaptive. That said, there is undoubtedly damage being done on a macro GDP level and on a personal level. My heart goes out to restaurant owners who built businesses, and some of those businesses won't open again.

Becky Quick4:19

You were in the trenches in 2008. You understand Fed action and fiscal policy. I'm going to read verbatim one of your tweets from April 9th: 'Not all of the bold actions in support of jobs and the economy will go smoothly, and of course public health will determine outcomes, but Monday morning quarterbacks are going to have a field day in minutiae. And Powell, we have the right folks on our economic issues at this critical time.' So the Fed's moves were shocking, and also the fiscal programs from Mnuchin and Congress. Do you think there's merit in both of those programs?

Lloyd Blankfein5:03

I think they acted terrifically. Undoubtedly, there will be a thousand PhD dissertations written from carrels in libraries when things are calm, and they'll find 50 things they could have done better. But in the fog of war, heat of battle, I think they acted very quickly, courageously, and largely correctly. As someone who used to run a big enterprise with a lot of challenges, and a lot of our business was trying to predict the future and position companies based on uncertainties, it's hard to get this stuff right. But somebody has to be bold and make a move. They made a move. It's easy to say they should have gone a little left or 13 degrees to starboard, but I think those guys did very, very well. Not everything has worked perfectly, but who would expect that? When I listen to some of the talking heads go at it, I think to myself, your knees would be knocking if you were faced with making those decisions at that moment.

Becky Quick6:09

Hey Lloyd, you mentioned your previous job thinking through risk. You're one of the best risk assessors ever. What do you think you'd be doing right now if you were running that business still, or another business, to make sure you survive this and handle anything that comes around the corner?

Lloyd Blankfein6:33

The first thing you have to do is make sure your people are safe. You have to get your house in order, make sure you're up and running. It's like the steward on an airplane telling you to put your mask on first before your kid's, because what good is it if you pass out? So you stabilize yourself, communicate with your people. One of the most important things in a service-oriented business like ours, which lives with other people's problems and tries to sort out their issues, is to make sure we're communicating well with our clients and helping them work through things. You don't want all your people staring at the screen wringing their hands with anxiety. During the financial crisis, I said that the best thing you could do is do your job and serve your clients. Two percent of the people in the company need to work on our own problems. If 100% are standing there distressed watching TV and the stock price, you're serving no interest. So I said, I'll communicate with you regularly, tell you what's going on. 98% of you just do your jobs, and 2% of us will sort out our own issues. Then get on the phones, engage with people, try to anticipate what's going on. The best way is to put yourself at the coalface and help people through their problems.

Becky Quick8:22

One of the things you're on record saying that has surprised you the most is that despite the trillions of dollars we're adding to the balance sheet and budget deficit, investors, many foreign, are still willing to lend the US a virtually limitless supply of dollars at six-tenths of a percent for ten years. That's great, but it's frightening. Is it good or bad?

Lloyd Blankfein8:50

Before I tweeted that, I was afraid it might be unpatriotic to hit send because maybe they didn't notice the trillions of dollars of deficits on top of our trillions of deficits. I'm thinking to myself, in ten years, we can always return dollars because we have a printing press, but the question is what those dollars will be worth. The fact that people will lend our treasury dollars at 60 basis points for ten years is incredible. That's very much owed to the dollar being the reserve currency. More than half our debt is owned externally by central banks and other institutions. The fact that the dollar is the only effective reserve currency at this point, and countries have to keep their reserves in dollars to make payments, means they have to invest in instruments. That's a huge asset for financing our deficit. I think we undervalue that. We're not close to a tipping point where people find a substitute for the dollar, but believe me, everyone in the world is trying to find a substitute. Even in the back of my mind as a policymaker, it's not what you can do now because we have to build out our deficits given the exigencies, but in the long run, we can't jeopardize that. We have to act responsibly so people don't look for reserves in something else.

Becky Quick10:42

Given the conversation, I want to talk about what the other side of the pandemic may look like in terms of business and its reputation. You lived through the bailouts of 2008. You took money from the government. The bigger issue is how you think the public will look at this later, and whether the goalposts have already moved. For example, when the PPP program was first announced, everyone was told to take the money. Then a week later, there was a shift: return the money because you'll get tarred and shamed.

Lloyd Blankfein11:25

I think big companies should be very reluctant to take government money. It's a natural thing. When you pass legislation, your focus is on getting the economy up and running. If there are inefficiencies, if some goes in the wrong direction, you say, 'Let's get things up and running, we'll tolerate inefficiencies.' Then as things cool off, your focus shifts. You no longer have the anxiety, and then you ask who had it that shouldn't have. The goalposts will shift over time. It's a natural phenomenon, not bad behavior by the government. But there will be winners and losers, or losers and bigger losers, and resentments will emerge because some people got help and others didn't. Right now, those resentments are repressed by the exigencies of the crisis, but as things calm down, the focus will shift. So if you need it, take it, but you really should need it.

Becky Quick12:53

What do you make of the airline bailouts? You can compare them to the auto bailouts and the bank bailouts. They're intended to keep employees employed, but we're already hearing that on September 30th, many of those employees will be fired. In this case, we've not just saved employment for a period, but we've saved the shareholders of the airlines. We've decided they are a special class.

Lloyd Blankfein13:30

That's one of the inefficiencies of the situation. We're not doing that because we favor those shareholders. We're doing it because air travel is integral, sometimes strategic, to the health of the overall economy. Sometimes you have collateral damage and sometimes collateral help. As I said before, when the anxiety over the collapse of an important industry dissipates, the full weight of the country will turn on the beneficiaries. That's why the goalposts will move. It's a natural phenomenon, but people should be aware of it going in. They had a very real need, and they're doing it because they had no choice.

Becky Quick14:27

What do you think about the danger to municipalities, cities, and certain states given the lack of revenue? What will happen long term with individual and corporate taxes? How does a city like New York get back on its feet?

Lloyd Blankfein14:50

The schism between Republicans and Democrats: Republicans don't want to bail out cities and states for their prior profligacy and obligations. At the same time, states employ people performing important services. If you want to save the jobs of restaurant workers, you certainly want to save police and fire workers. The obvious compromise is for the federal government to distribute money to states and municipalities but make it very specific and targeted to save essential municipal job functions. Someone will point out that dollars are fungible, but let's remember we're fighting a war here. You can't worry about your ship or tanks getting scratched in the process. We have to do what we have to do.

Becky Quick16:03

What do you think happens to corporate taxes? We've lowered them, yet we've created the greatest insurance policy for corporations.

Lloyd Blankfein16:18

We'll have to get more revenue. Some will say companies have been helped by loans, subsidies, and federal action that lowers their funding costs, so there should be more revenue. The other side says raising taxes makes it harder to raise GDP. The real way to fix the deficit is to allow the economy to reflate and grow faster. The government is a partner in all economic business. At a 21% tax rate, they own 21% of profits. They should want businesses to be stimulated. But it may be unavoidable that additional revenue has to be raised. One issue from the last crisis is we hadn't finished paying the price in terms of deficits and the Fed's balance sheet, which made us more vulnerable in trying to buy our way out of this one.

Becky Quick17:40

What do you think the danger is to the banking system? Listening to Warren Buffett over the weekend, he hinted at worst-case scenarios with commercial real estate. If we have a real problem, mortgages and rent won't get paid, and that will bubble back to the banking system. We'll likely see it in the energy sector with levered businesses connected to banks. We're in a much stronger position today, but as a risk manager, how do you think about that?

Lloyd Blankfein18:18

We're in a much stronger position. I have a very vivid imagination, so I can always extrapolate situations where we get into a horrible vicious spiral. But the banks had help. Competition might have driven them to be more aggressive lenders with less capital and more leverage. It's speculative now. Many of us were scarred by the financial crisis and didn't want to go back there. But it wasn't our decision. The rules passed required huge amounts of capital subject to stress tests with conditions like what we're seeing now, sometimes in excess. I can always imagine worse things, but there's a good reason there's not much pressure on banks' financial positions right now: they're very well capitalized. In fact, I'd guess banks are under pressure from the official sector to be more aggressive in lending to help the economy. It's the bankers who survived the financial crisis who are reluctant to take even three steps back to that bad place they were in a dozen years ago.