>> this is number markets. hearing lloyd hearing lloyd blankfein plans to step down as soon as the end of the year according to the wall street journal. he could be replaced by one of its two copresidents -- let's talk about the development here -- our guests are still with us, stephen, let me start with you. thing goldman one sachs has done wrong of their last couple of years, what would it be?

>> the haven't figured out the financials, they have said they want to be like frome or walmart, year-to-year they have been hopping around what they want to be. they never came up with a great --e plan for this rule whether it is much heavier regulation of the type of business. not getting any relief from the recently passed senate bill that is helping smaller banks, but not .ecessarily goldman sacs >> there is some relief there but it is not going to get to the pre-crisis. and the rest of wall street has moved on. regulators, goldman

sachs has not gone. known as theare best paint shop -- is that the case? not, one of the persistent problems is the fact they continue to pay more. they pay more because it gets is the best people, but in the past ofr to have had a number hard to trade high-yield bonds. other firms like morgan have found their trading mojo, and it is not clear they are getting what they are paying for. one of the big problems is lower returns and the pay is the biggest part. vonnie: what is it? everyone at,000 for goldman, the average is 350, where as other banks like jpmorgan has more tellers and

their average is more like 250. goldman doing right? >> the example that we saw in commodities brought down there trading numbers shows that there trading is still high risk. the bigger guys like city and jpmorgan have done is to go more ,or flow and take less risk more flow and more volume, which makes it is a lower margin on bigger volume and bigger flow area but you don't take as much risk, so if commodity is going in the wrong direction -- then you don't lose as much and still get the float and money has flown through. atphen: if you look estimates for the last quarter, it is citigroup, the one that is

supposed to have the biggest increase, not goldman sachs. that also place to the types of clients that they have, they have targeted clients who are not small hedge funds and are not taking big risks and are investing more in the long run. there is still a lot of trading and volume, but not as much risk, and you are not taking as much risks trying to help them. so these things make a difference. they haven't found an whichative is this model, everybody has tried to find different things. the big guys have flow models and can do bigger and more, and goldman is still struggling and regulations aren't good for them. the environment is at the same. the risk appetite around the world is not the same, maybe it will never come back. it has been tough for the last 10 years. stephen: and the hedge fund they

have focused on has struggled too. vonnie: let's recap the news we know, wall street journal says lloyd blankfein is to be done as ceo, and i could potentially happen by the end of the year and two copresidents have been named. that is where we stand right now. --might be leaving as ceo but he could stay on as chairman of the board? stephen: it is not as great of a job for swartz or solomon if they get the ceos, and those guys are wall street, goldman sachs, high-ranking executives. they want the keys to the car. in mattlet's bring

winkler. blankfein me to the company, and let's preface this by saying he is still ceo until he steps down, possibly by the end of the year. he came to goldman at the top when goldman was very proudly championing something that is a value at risk which is about risk-taking. as you heard from my colleagues so far, one of the big disappointments in the aftermath of the financial crisis is that it has been able to be the great trading firm that it was before the financial crisis. that is why it took longer than they would have liked to get the stock back up to the all-time high recently. he of course is a traitor to begin with. why isn'tzzle is,

goldman -- 10 years after, still not the leader in trading consistently? shery: yet seen goldman sachs throughout the year, how has the culture changed over the decades before lloyd blankfein and after lloyd blankfein? firm it is a much bigger and goldman will be the first to say that. a lotou get some big, will change because of the size and scope of the firm. having said that, the remarkable characteristic is that it remains among the best and the brightest, inside and outside of government, and inside and outside of wall street. , givendman sachs cache the turmoil in the financial crisis, and much of it was he'd goldman,n -- heeped on

and they have prospered. got the news going back -- gary cohn being the latest. there is ties the government, but it doesn't necessarily mean it has helped but imports to the fact that goldman is able to hire and retain some of the brightest and most attractive minds. trump, ituld say with is a whole new picture and perspective, and it is not the the as goldman counseling bush administration or the clinton administration. vonnie: expand on that. matt: somewhat say that trump is not the most consistent resident and has changed his mind from day-to-day. if you are advising the trump administration from the perspective of goldman sachs,

that hasn't gone exactly as planned and witnessed the departure of gary cohn. i am not sure the latest engagement with the white house would be considered a very successful one. shery: we were talking about the legislation and senate bill on dodd-frank and how it is playing in wall street since they have lost gary cohn inside the white house. what does the future hold for big banks, including goldman comes to dealing with the trump administration that is so unpredictable? matt: the answer remains to be seen. it is an unpredictable administration. other than the fact that they are opposed to regulation -- to the extent that it will be opposed to any kind of regulation on any kind of industry that is good for the banks. trump's at times,

bombastic about bankers and he targeted goldman sachs. it is a question of how much of a positive this is going to be for wall street. -- andor deregulation they are all about less regulation. powell is talking about volcker rule -- even though it is not going to be part of the senate banking rules when it merges with the house, it is not part of the dodd-frank rollback. about taking ag less hardluck of how we use -- and impose this role. matt: the critics what less kindly say that the fox is headed for the henhouse. [laughter] vonnie: we are not going to unpack that statement, but here is a soundbite from the gentleman from oak street capital, and a personality as

well. here is his reaction. >> i have lived through many goldman sachs ceos and they have been terrific. the copresidents today, david sullivan and harvey schwartz, are terrific. i assume both or one will step into lloyd's shoes and the firm will go on. he seemed cool and collected, and the stock has only gone higher. matt: this is not unusual for goldman. there had continuity whenever someone leaves to go into a higher calling. you saw that again and again, bob rubin, steve friedman, for example, were leading the firm in the 90's. was certainly not

the rest of talent when he departed to the bush white house. this goes a long way. to what you are saying, there is the wall street history that paulson was a banker. goldman had that banking blankfein and with and gary cohn, because they came together through the commodity side of trading -- there was a shift more towards trading. it played into their increase of value risk but the bar measures -- that is what propelled the banks through the early 2000's until the financial crisis. i think other banks move back towards investment banking and away from proprietary trading. goldman never made the switch, in part because it became a much bigger business than it used to be and it is hard to make that much money on investment banking

and justify the size of the firm. justify this huge building in lower manhattan, among other places. they could move back to banking unless they cut down the size of the firm and started paying people less and they were not willing to make that adjustment. shery: thank you, who will stick around with matt winkler, thank you so much with the latest. we will have more on this developing story, and we are hearing that goldman sachs ceo lloyd back fine is set to leave the firm by the end of the year according to the wall street journal. this is bloomberg. ♪

shery: this is bloomberg markets. vonnie: headlines crossing the bloomberg now, we are awaiting

sentencing for martin raleigh -- martin shkreli. sentenced between one and 15 years potentially, maybe more. we don't have the actual sentence yet, but it is playing out in a courtroom in new york, saying he is embarrassed and ashamed that he made great mistakes and short poor judgment and told the court rethink that this is my fault. he prosecutor is saying that has no respect whatsoever for the law, and we continue to keep you updated as prosecutors are arguing for 15 years behind bars. blankfeink to lloyd was expected to leave goldman sachs by the end of the year, according to the wall street journal. of june of 2006

after hank paulson become the head of u.s. treasury secretary. winkler,s this matt and joining this conversation, we are seeing these copresidents at goldman sachs, tell us about their personalities and the way of doing business. >> the first that comes to mind -- dj -- i think he likes electronic dance music. that aside, he is a banker. -- i want tohwartz say he started and quantities, more of a trader. in my mind, i could imagine them leaving the firm together -- but to be fair to the wall street journal reported, i believe the paper said one of them, not both of them, will succeed him to

there is a rich history of two people running the firm, but they are not interested in going back to that. matt: probably the most terrible was john weinberg, and original from the goldman sachs family, and john whitehead. different people but they got along famously and ran the firm together. they made goldman sachs -- they transformed it into one of the strongest, if not the strongest firm on wall street. they set the stage. bob rubin and steve friedman followed and they also shared leadership of the firm. there is a long-standing tradition for this. it would be unusual if it happened again. shery: the journal is saying he is 63 and goldman isn't looking young the two copresidents to

replace him, which does it necessarily make it will be a double appointment. max: hearing that reminds me that it is an important job and influential -- there hasn't been that many chief executive officers and goldman sachs and they have been around for more than a century. this is a gross overgeneralization, but in my head, matt knows more than this -- there is a few ways set in history to lead goldman sachs. i think gus leavy literally died at his desk. [laughter] like likehear that find is a want to give. >> i do not plan to die at my desk. onnie: he wasn't running leaving -- but these things change, and ceos, as we heard earlier, say things that they

don't necessarily have to stick to. max: i am glad you have that clipped to the for my thoughts. not open touple are lloyd blankfein, bob rubin, he left to join the clinton administration. hank paulson left to join the bush administration. i am not sure lloyd blankfein will join trump. vonnie: your cap to have everyone agree with you in the administration, but could it be possible he goes to the public service? public service is not inconsistent at all with who lloyd blankfein is. his spending a lot more time on all kinds of issues, whether it is health, science, climate, diversity, inclusion. they all have been part of his agenda.

any one easily embrace of them, if not all of them. vonnie: he is still young. matt: he is on the other side of what the trump administration is in favor of, save one thing, which is regulating wall street. him and the trump administration are in agreement there. could gary cohn be feeling at this moment -- how bad could gary cohn be feeling? matt: i wouldn't suggest he would be, he could take credit in saint that the republican partyparty and the trump administration -- the tax cuts. he did say i had a big part of that if not the most important part. vonnie: he could do anything now, he got very far along that route, and he went and had time in the administration and could take credit for public policy

that has been made. and there are plenty of people who have left goldman sachs and haven't gotten to administration and have done else.ine somewhere max: i can't help but think back to that ad that was donald trump's closing else. ad. i'm a big it was donald trump doing the voice over, but there sayingominous voiceover there is corporate criminals robbing your wallet -- and there's this long tradition of lloyd blankfein going to the administration, but if he joins the trump, my mind will be gone. is there any possibility that it is not a coincidence that gary cohn is gone and then you get lloyd blankfein talking about leaving my the end of the year. is there a chance they could be doing something together? shery: the conspiracy theories arise. matt: just the facts, ma'am.

i cannot speculate. will: i believe gary cohn agree it was challenging to be part of the trump administration given the white house and how he needed to get his point across. we have known he wasn't happy about a lot of things that happened there. matt andoin speculating, i talk about a phone call i had before the eye came on the air -- before i came on the air. he said gary must wish he sat at the old presidency because he would be that heir apparent take over lloyd blankfein. to report onor me wall street's culture to think of gary jumping from the white house that the goldman sachs, and deena powell did just that. what werealistically,

have heard from banks as they want to choose someone who is there. you have got to think that lloyd leaving is going to create tension between the people who can take a seat. don't forget that when jon corzine was pushed out, it wasn't a happy event. vacation a family skiing around christmas time and hank paulson went straight to the management committee and said, if you don't get rid of this guy, i am going. was a dramatic phrase, but it was a coup. findtake my colleagues to out what is going on, but it might be something dramatic. you never know. shery: what will be the biggest challenge for whoever takes over? matt: wall street is not the earnings generator it once was. it is not that return on equity

or capital that it once was. the bigger banks have done well because you have low interest rates in a low interest rate environment. was easier to take risk, of having said that, we are not back to the days of 2006 when wall street ruled the world. unfortunately. ,ot the way we would have liked as we unfortunately all suffered. will hard times come again? matt: the risk on trade at some point will take us to a bad end. [laughter] shery: thank you so much for your time today. matt winkler -- amex also joining this conversation. a quick check of the markets, we

are seeing u.s. stocks and yields continuing to rise, responding to the strong payrolls number, with employers hiring the most workers and two years, and you see the s&p 500 trading above the moving average, and the tech index is seeing a new intraday record. -- biggest gain in a week emerging markets also doing well and gaining the most, about a percent at the moment. we also have positive news on the korean peninsula as well. join us later tonight. this is bloomberg. ♪

>> from bloomberg world headquarters, i am david westin. shery: and i am shery ahn, welcome the "bloomberg markets: balance of power". here are the top stories of

the hour, lloyd blankfein is said to be stepping down as head of goldman sachs by year end, the candidates replacing him are two down. president trump plans to meet with kim jong-un by may, with the whole world watching and hoping for a breakthrough. tariffs or not? tariffs on steel imports, but nafta partners and some other friends of united states i get a pass. ♪ shery: lloyd blankfein is a really ready to step down according to the wall street journal, and we have been talking about this -- the head of gdm