Hearings before the Financial Crisis Inquiry Commission (FCIC), started off with a bang on January 13, when Goldman Sachs Chairman and CEO Lloyd C. Blankfein testified that at Goldman Sachs, "…
The Commission heard as well from JPMorgan Chase & Co. Chairman and CEO, Jamie Dimon, Morgan Stanley Chairman John Mack, Bank of America CEO and President Brian T. Moynihan. Testimony for all participants can be seen at the FCIC Web site.
This is the first time that the head of one of the large broker/dealers has stepped up to publicly state support for the fiduciary standard–and by extension, individual investors. The extension of the fiduciary standard that applies to investment advisors, to broker/dealers who provide advice to investors, is part of the Senate's proposed discussion draft of financial services reforms, as it stood on December 10. The House passed similar requirements on December 11, in H.R. 4173, the Wall Street Reform and Consumer Protection Act.
Blankfein said earlier in his testimony how important the advisory business is to Goldman Sachs. (Of course we understand that this is not all retail advice.) "We have been particularly focused on fee income businesses, such as advisory, commissions and asset management fees, and since our IPO more than ten years ago, we have generated half of our income from them. We continue to see the benefits of a diversified revenue stream across a global franchise centered around integrating advice, execution, financing and co-investing with best-in-class risk management to a broad range of largely institutional clients."
Not only does Goldman's CEO look like an investor's champion, he gets the prize for being first to ride in on his white horse and take this greatly needed step toward restoring investors' faith or at least good will toward those who serve them in the financial services industry.
Will other brokerage CEOs follow suit?
