Inside the Goldman Soap Opera: What It All Means

The high-stakes, made-for-TV drama roiling Goldman Sachs – Wall Street’s most elite and storied investment bank – continued on Tuesday as John Rogers, long the essential man behind the scenes whispering in the ears of CEOs and board members alike, stepped back from at least part of his enormous role at the firm. 

Rogers on Tuesday relinquished the title of chief of staff of the firm, according to a memo from Goldman CEO David Solomon. Rogers, 67, will retain influential positions, including executive vice president, secretary to the board of directors and member of Goldman’s powerful management committee, as well as chairman of the Goldman Sachs Foundation. 

Russell Horwitz, a 16-year Goldman veteran who later served as chief of global affairs at hedge fund juggernaut Citadel, will rejoin the investment bank as chief of staff, reporting directly to Solomon.

Horwitz, once Rogers’ deputy, was long seen as a potential successor to Rogers. But multiple senior current and former Goldman sources said he left in part because Rogers declined to implement any succession plan. 

Those sources also said Rogers’ refusal to begin to step back earlier and relinquish some of his powers also led to other high-profile departures, including that of former senior partner and communications director Jake Siewert. 

These people suggested Rogers’ willingness to now relinquish the chief of staff job was at least in part an acknowledgement of the talent exodus and a feeling among current and former executives that the bank – long known for both financial excellence and staying out of the news as much as possible – had lost its way. 

“I think it’s a recognition on John’s part that the place has lost a lot of important people, a lot of culture carriers, including Russell and Jake,” said one former partner still close to Rogers, Solomon and other top Goldman executives. “Losing Jake was especially crushing given how good he was at insulating the firm from a lot of this negative press and offering real, solid strategic advice to David.”

The former executive added: “I think John realizes that he could have executed his own succession quite a bit better.” 

But other senior executives and former partners suggested that the move was not necessarily a retreat for Rogers since he will maintain his intimate and forceful relationship with the board, which will ultimately decide Solomon’s fate as CEO.

Rogers, a onetime top Democratic operative in Washington, has been the largely invisible man behind the curtain at Goldman for multiple CEOs including Solomon, Lloyd Blankfein, Jon Corzine and Hank Paulson. And Tuesday’s drama did little to clear up the mystery around him.  

“It’s very difficult for me to figure out exactly what this means and how it really went down,” said one current top Goldman executive, who, like others interviewed for this story, declined to be identified because of the highly delicate personnel matters under discussion. “You could plausibly say Solomon won a round here. But he hasn’t won the war.” 

Indeed, many senior partners inside the firm and former partners spent Tuesday trying to decipher exactly what the change meant, given recent pressure on Solomon over both the bank’s financial performance and questions about the CEO's private behavior, including his high-profile DJ career and use of private jets. 

The Messenger reported in June that Rogers had “lost confidence” in Solomon as chief executive amid the media reports and sliding financial performance. The firm strongly disputed that notion at the time and said Rogers remained fully supportive of the CEO. 

But inside Goldman and among the ranks of former top partners, fierce speculation and maneuvering continued, with many blaming Solomon for the departure of top talent.

And both inside and outside the bank, current and former partners spoke of various scenarios for replacing Solomon, including the return of former chief financial officer Stephen Scherr to serve as CEO.

Others speculated about a potential joint CEO arrangement – which Goldman employed in its days as a privately held bank – featuring Jim Esposito, currently the London-based co-head of global banking and markets, and Marc Nachmann, currently global co-head of asset and wealth management, taking charge of the firm. 

Those rumors eased in recent weeks as Solomon’s personal issues faded from the headlines and the board declined to make any moves.

Now, Rogers’ exit from the chief of staff job has re-ignited speculation, with at least some partners suggesting that it means Solomon is likely to survive.

“It’s definitely a win for David in that Rogers takes a step back and [David] can say he brought back someone everyone likes,” said another former senior partner at the bank. “But John continues to have the ear of the board and is still in a very strong position to influence how the board thinks about potential CEO succession.” 

All of the current and former Goldman partners suggested Solomon’s fate would largely be decided by the bank’s financial performance over the next couple of quarters.

While Goldman’s share price has fared well in the economic recovery from the pandemic, its underlying numbers have faltered largely because of a failed effort to expand the bank from its roots as a trading and top-end advisory firm into a mass-market financial services provider through products like the Goldman-backed Apple credit card and the Marcus lending platform.  

Goldman’s earnings and revenue both missed analyst expectations in the firm’s second quarter, and profits fell 58 percent. Goldman’s return on equity, a key measure of Wall Street success, also plunged to 4.4 percent in the quarter, vastly below its peers and its own target of 15 percent. 

“Even if David has managed to navigate beyond the recent headlines, and even if he doesn’t have Rogers on his back as much, none of that will matter if the numbers don’t change,” said the first former senior partner. “Maybe he survives one more bad quarter but certainly not more than that.” 

Neither Rogers or Solomon responded to a Messenger request for comment.