All You Need is Love: Goldman Sachs (Hearts) Everyone

Last Updated May 7, 2010 4:07 PM EDT

Meet the kinder, gentler Goldman Sachs (GS). At the investment bank's raucous shareholder meeting today, chief vampire squid Lloyd Blankfein laid his big wet beak on -- get this -- Jesse Jackson. What's next, slurping milkshakes with Michael Moore?

The Reverend attended the show to urge Goldman to improve its management, perhaps by appointing him chairman of the board. In any other year, Blankfein might've politely told Jackson to stick his Rainbow Coalition where the sun don't shine. But today's Goldman has a PR strategy to execute.

That entails, among other things, leaking word that the banking firm is meeting with SEC officials to discuss settling the agency's lawsuit; arranging softball TV interviews where Blankfein can show his cuddly side; and enlisting avuncular billionaires like Warren Buffett to sing Goldman's praises.

Sticking to script, Blankfein responded to Jackson's homily by saying that "there is no success for Goldman Sachs unless the economy as a whole grows." I love you, man! In his opening statement at the meeting, the Goldman exec also pledged to review the firm's business practices while defending truth, justice and the American way.

There is no bigger priority for our Board of Directors and management than to undertake a comprehensive review of all of our business practices. This effort will be defined by one central question: Are the clients of Goldman Sachs and the broader public interest being served in a manner entirely consistent with their highest expectations? We believe in the quality of our business standards, but are committed to elevating them to an even higher level.
You mean even higher than they are now? Not much of a stretch there, Lloyd.

But behind the scenes, it's business as usual at Goldman. Board members voted unanimously to help defeat a shareholder proposal that would've split the CEO and chairman roles at the company, both of which are held by Blankfein. While no panacea, that's the sort of basic corporate governance reform that really could elevate Goldman's business standards. Bank of America (BAC), Citigroup (C) and Morgan Stanley (MS) have all separated the board positions in recent years.

Indeed, all seven proxy resolutions made by shareholders were voted down at the meeting. Along with revamping Goldman's board, those included proposals that the company take steps to protect itself against losses from derivatives trading; review executive compensation; and disclose the company's political contributions. The board was unanimously reelected.

If the annual meeting was a washout for anyone looking for signs of change at Goldman, talk that it could pay up to $1 billion to end the Abacus case does suggest the company is softening its stance. After the SEC announced its civil suit, Goldman circled the wagons. Blankfein and other Goldman execs also strenuously denied any wrongdoing in a subsequent congressional appearance.

What changed? The hard line failed to reverse the slide in Goldman's stock, which tanked after news of the SEC complaint and word that the feds had also launched a criminal investigation. Even outlets like the WSJ started making noises that Blankfein is a growing liability and should take one for the team.

Although the board vote to let Blankfein remain as chairman and CEO suggests he retains their support, that could change if Goldman's market value continues to sink. For now, the company will likely follow the advice of its crisis management pros and try to change the headlines. It's spring, after all. Love is in the air.

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    Alain Sherter covers business and economic affairs for