Pension Proposal Seeks Removal of Goldman CEO Blankfein as Chairman of Board

(September 15, 2011) — Goldman Sachs should remove Chief Executive Lloyd Blankfein from his post as chairman, the pension plan of the American Federation of State, County & Municipal Employees has asserted.  

“Goldman has come under fire recently, as the 2011 Levin-Coburn Report on the Financial Crisis (Levin Report) found that conflicts of interest led Goldman to ‘place its financial interests ahead of those of its clients,’ during the worst financial crisis in decades,” a release by the scheme stated. “The Justice Department is reportedly investigating Chairman and CEO Lloyd Blankfein’s 2010 testimony before the Permanent Senate Subcommittee on Investigations for possible perjury.”

Additionally, the pension fund noted that Goldman has settled Securities and Exchange Commission charges relating to its Abacus deal, in which the bank allegedly deceived clients about the quality of Collateralized Debt Obligations (CDOs). Furthermore, in a March 2011 10-K filing, the bank giant disclosed possible legal costs of up to $3.4 billion related to its actions during the financial crisis.

“The AFSCME Plan believes that the lack of an independent board chair contributed to Goldman’s current problems and that separating the offices of CEO and chair will protect and improve Goldman’s future performance and the value of its shares,” a report accompanying the shareholder proposal stated. “Separation of the chair and CEO positions is a reform increasingly supported by both directors and institutional shareholders as instrumental in protecting the value of publicly held companies.”

In April, a report by a United States Senate subcommittee found that Goldman Sachs misled clients and Congress about the banking giant’s investments in securities tied to toxic mortgages. Senator Carl Levin (D-Michigan) asserted that he wanted the Justice Department and the SEC to investigate whether Goldman Sachs violated the law by misleading clients who bought CDOs without knowledge that the firm was betting that they would decline in value.

In response to the 635-page report by the Senate Permanent Subcommittee on Investigations stemming from a two-year bipartisan analysis on the drivers of the crisis, Goldman issued the following statement:

“While we disagree with much of the report, we take seriously the issues explored by the Subcommittee. We recently issued the results of a comprehensive examination of our business standards and practices and committed to making significant changes that will strengthen relationships with clients, improve transparency and disclosure and enhance standards for the review, approval and suitability of complex instruments.”