“I certainly hope not, because that would not mean that senior management wasn’t doing their job that well, but I wouldn’t say so,” he says. “There’s always a lot on our plate. There’s always a lot of things going on. We always know that the primary job we have working for our shareholders is to manage the business appropriately to make sure that we’re managing our risk correctly, but also looking at growth and looking what’s going on, and it certainly didn’t feel to me like there was any lack of office.”

 

The dramatic settlement struck with the Securities and Exchange Commission has lifted one weight from the company's shoulders, although knock on effects are still possible. To that end, Viniar is quick to emphasise that the settlement does not represent an admission of guilt regarding any of the charges.  “We entered into the settlement without admitting or denying the SEC’s allegations, but acknowledged that we made a mistake in including incomplete information in the marketing materials,” he says. “We firmly believe this settlement is the right outcome for the firm, our shareholders and our clients.”

 

But there is an admission that certain behavioural aspects of Goldman Sachs needed to be addressed and this is now being done. “At our annual shareholders’ meeting, the firm announced the creation of the Business Standards Committee,” explains Viniar. “The Committee is tasked with reviewing our business standards, and making recommendations to the Board of Directors and Senior Management to reinforce the firm’s client focus and improve upon the transparency of our activities. A Committee of the Board was established to oversee its work, which is well underway. We expect the finding and recommendations will be meaningful to our constituents.”

 

The desire to get back to normal business is understandable given the current environment in which Goldman Sachs is working. “The operating environment in the second quarter of 2010 was characterised by broad market concern regarding several issues principally European sovereign risk, slowdown in China’s growth trajectory, and uncertainty regarding financial regulatory reform especially in the US,” admits Viniar. ”These concerns resulted in a significant focus on the prospects for the macroeconomic environment, and the risk of a double dip recession. Not surprisingly, these concerns negatively impacted asset prices, market volumes and accessibility of certain markets.”

 

Against this backdrop, Goldman Sachs – like so many other firms – is having to make some tough decisions about its priorities, with Viniar insisting that the customers needs take precedence over other considerations. “Our mix of business is not necessarily driven by the management or the Board sitting back and saying, okay, we’d like to have X percent in this and Y percent in this,” he says.  “A great portion of the way our mix of business unfolds is driven by what our clients want. In quarters where there’s more of a demand for risk outflow you might see more revenues coming from the trading businesses. In quarters where there’s more demand for M&A and there is higher value, you might see more of the mix coming from there.

 

“It really is driven by what our clients are demanding from us as opposed to us saying let’s concentrate more here or there. Now we do allocate people and resources to various businesses, but again even that is primarily driven by what our clients are demanding from us. It is very, very important.”

 

But there's also a degree of expediency that kicks in that's determined by the performance of various geographical markets. “We’ve said many times that we chase GDP around the world that in periods and places of better economic growth that will be better for our business, because there is just more activity,” explains Viniar. 

 

“When economies are growing, our clients want to do more, where they want to buy companies, sell companies, issue equity, issue debt, hedge risks. There is just more activity in that environment. It’s not going to be a straight line it’s pretty clear that the developing markets are going to have over the next medium term, higher growth than developed markets. So, not at the expense of the developed market, but directionally, I would expect, we will invest more in those markets going forward.”

 

 

The firm is also keeping a wary eye on the radically changing nature of the financial regulatory regime in the US as President Obama's sweeping changes kick in.  “The financial regulatory legislation is the most sweeping regulatory change the industry has faced in decades,” muses Viniar. 

 

“We believe that improving the safety and soundness of the financial system is critical to creating a stable foundation for sustainable economic growth. While the legislation touches a broad array of the activities undertaken by financial institutions, we believe there are two principal areas of impact for Goldman Sachs - derivative legislation and restriction of proprietary activities.”

 

But he's quick to add that it's early days for the new regulatory regime. “We’re analysing the legislation and determining the best course of implementation for our clients and the firm,” admits Viniar. “We believe that it’s too early at this stage to quantify with any degree of certainty the financial impact of the bill. It’s understandable that the marketplace has produced multiple projections of the potential revenue impact.

 

“However, any analysis of the current situation relies heavily on a series of broad-based assumptions, and in many cases tends to omit the potential offsets like capital release and redeployment, changes to our cost structure, and our ability to react to the new regulations. The actual rules are going to be written by the regulators, they’re not going be written for probably 15 months, then the transition periods as you know for many of the businesses are quite long, in some cases up to five years beyond that. 

 

“So it’s just extremely hard for us to quantify right now. We have quite a number of people looking at this. We are looking at all the potential changes that might happen and as more information unfolds, we will make the appropriate changes and hopefully move forward as fast if not faster than anybody,” he adds. 

 

“We’ll see how the regulations unfold, but I would tell you our expectations is that there will be regulations not just for banks, but for a systemically important financial institutions that we think are going to be largely similar to bank regulations and we’re fairly certain we’re going to be one regardless.”

 

Clearly it's a turbulent time for Goldman Sachs and one that the senior management team will be well pleased to distance itself from as soon as possible. But that's going to take time. Viniar has found himself having to deny that a new CEO will soon be put in place, while there is ongoing speculation that even with the SEC allegations settled,  the firm may yet face legal actions brought by private investors or even a criminal investigation into recent events. 

 

Viniar is pragmatic about this prospect. “I couldn’t tell you if there is a company in the world that does not have a threat of a criminal investigation at some point in time,” he says, “I mean, every company in the entire world has that. All I can tell you is that we’re not aware of any criminal investigation on Goldman Sachs.”

 

But he concludes: “As a firm, we rely on our culture, our track record of execution, and our commitment to our clients, shareholders, and the public at large to guide us through this period of change.”