Goldman chief sets a distaff goal

While there’s no saying when the financial crisis will get over, there has been some ‘turning around’ in the US, feels Lloyd Blankfein, chairman and CEO of Goldman Sachs group.

“I am sure we are not far from it,” he said in an interaction with the media during a brief stopover in the city on Wednesday. Blankfein, who addressed the Indian School of Business, talked about providing women greater access to business and management education, and how it could lead to improvements in real GDP and per capita income for India, among other things. Excerpts:

What do you expect of the stress test of US banks?
I think the intention is to provide confidence to the market by validating or confirming the financial integrity of institutions. The stress test has the potential to be validating but it also has the possibility of producing uncertainty. But, the idea is that every institution is going to pass subject to what the regulator tells them to do. So, some of them pass because they are very well-capitalised and don’t need anything more. Some of them pass subject to raising capital. As they raise the capital, they show that they are able to pass. So, everybody will pass (the validation) subject to a different degree of action that they are mandated to take by the regulator. Everybody will come up with something to build confidence. The key word here is confidence. So, either they build confidence on their own by raising capital or the regulator will put in the required cash to build the confidence.

When is the US economy likely to come out of recession?
I don’t know. It may have already started. I think we have already turned the corner. The movement in stock prices, confidence and liquidity in capital markets mark the trend. Nobody is really sure, but there has been some turning around. Six months ago or more, there was real fear and some parts of the markets were in real chaos. I think that fear has now abated. But in the greater context of depression, the only thing we have to fear now in the US is the fear itself. But hard work will help overcome that.

There are some very hopeful signs. Still, there are some difficult problems to be solved. How will the crisis be over? We have to deal with the depressed asset prices, there are issues with the insurance companies and there is still so much out there. It is not certain. When it turns the corner, it will still do so with a lot problems and a lot of uncertainty. But, I am sure we are not far from it.

How’s Goldman Sachs faring? Do you see some turnaround in terms of your profits?
Since our fourth quarter was down and first quarter was up, I certainly see that as a sign of turnaround. The business environment is not facing ordinary opportunities. That need not mean it is bad. I am only saying that it is not ordinary. We focus more on institutions and lot of transactions.

The investment bank activity saw much lower demand. However, our transactional activity, intermediation and market making activity was much, much greater because of the disrupted markets and liquidity issues. I know it is not a balanced profile. But on the whole, I think I am optimistic about the economic picture.

Why is Goldman Sachs laying so much emphasis on women entrepreneurs through the 10,000 Women programme?
In fact, one of our research reports, titled “Women Hold Up Half the Sky,” concluded that greater participation by women in the Indian labour force could increase real GDP by 1% and income per capita could increase by up to 13%.

Additional Goldman Sachs economic research found that the Indian market has its own unique challenges and opportunities. India’s female labour force participation is 36% compared with the BRIC average of 60%. The literacy rate for adult females is 48% versus an average of 80% for the BRIC countries.

Clearly, increasing literacy rates and labour force participation among women represents an enormous opportunity for the Indian economy.

And that’s why, providing more access to business and management education to women in need is so compelling. But to provide effective education, you need experts who understand the needs of entrepreneurs on the ground.

Since our launch of the programme just over a year ago, we have formed partnerships with more than 50 academic institutions and non-profits in 16 countries, including India, Brazil, China, Afghanistan, Nigeria, and the United States. These partnerships represent a global network that can design and implement tailored business education programmes in almost any market.