The smiling Buddha sitting in the center of the simmering heap of Wall Street is Lloyd Blankfein, CEO of Goldman Sachs. He's the last man standing. When the rest of the Street fell for mortgage-backed securities, Goldman wisely steered clear. Blankfein has also transformed Goldman from a prestigious purveyor of corporate advice into the most profitable trader in Wall Street history—chalking up earnings of $11.6 billion last year and landing Blankfein, 53, almost $70 million in payouts.
Blankfein's rise reflects two big changes in the U.S. economy over the past 25 years. The first is a power shift from Main Street to Wall Street—from making things to making deals. The other big change is on the Street itself—from giving financial advice to managing risk. Blankfein has transformed Goldman from blue-chip adviser to the Street's top risk manager.
We can debate whether these changes have been good for America. Blankfein's predecessor was Treasury Secretary Hank Paulson, and before that, former Treasury boss Bob Rubin. There's little doubt he has been deeply involved in Washington's strategy for keeping the rest of the Street afloat. Once, captains of American industry had great economic influence in Washington. Now it's the investment bankers, with Blankfein leading the charge.
Reich, author of Supercapitalism, was U.S. Secretary of Labor from 1993 to '97