Streetwise — Chapter 6: From Gold Man to Goldman

1. 1. Goldman Sachs acquired J. Aron in 1981 for $130 million, the largest acquisition it made until 2000.
2. 2. The gold boom was enabled by President Gerald Ford signing a bill in 1974 allowing private gold ownership, reversing FDR's 1933 executive order.
3. 3. J. Aron's profit halved to $30 million in 1982 and fell to zero in 1983, as inflation was tamed and the metals bubble popped.
4. 4. The cultural clash between Goldman Sachs and J. Aron was stark: Goldman was Ivy League and polished, while J. Aron was street-smart and physical.
5. 5. Lloyd Blankfein, the author, was a salesman at J. Aron, the lowest status in Goldman's hierarchy: commodities, sales, and a declining division.
6. 6. J. Aron used code names for clients and compartmentalized information to prevent defections and protect sensitive transactions.
7. 7. Blankfein felt excluded from learning opportunities at J. Aron, caught in a vicious circle of not being invited to discussions due to lack of knowledge.
8. 8. A hundred of the three hundred J. Aron staff were laid off in fall 1983, but Blankfein survived, though his boss tried to stoke his anxiety.
9. 9. Blankfein's wedding announcement in The New York Times embarrassed his parents by listing his father as a postal clerk.
10. 10. J. Aron's compensation system was a negotiation akin to haggling in a bazaar, with bonuses delivered in multiple envelopes due to computer limits.
11. 11. The acquisition of J. Aron ultimately proved valuable for Goldman not for its profits but for its international connections and physical trading expertise.