The bankers are reinheriting some of Wall Street’s most precious earth.

Goldman Sachs Group Inc. announced on Monday that David Solomon would become sole president, edging out Harvey Schwartz, who is leaving the firm. The move all but ensures that Solomon will succeed Lloyd Blankfein as chief executive officer. The Wall Street Journal reported last week that Blankfein would step down by the end of the year, though Blankfein offered little clarification. The Solomon elevation appears to be a move in that direction.

Blankfein’s departure, whenever that is, will culminate a period in which Goldman seemed unsure of what its future should be. Blankfein suggested at times that he would like the firm to be the Walmart of Wall Street, ambitiously building up a staid consumer lending business. At other times, Goldman’s leaders pointed to Apple or Google. Blankfein never seemed willing to relinquish Goldman’s brash trading culture, which had paved his rise to power -- he once famously stormed out of a management meeting because the firm was unwilling to make as big a bet as he liked -- but has more recently led to some embarrassing losses. At the height of the bitcoin frenzy last year, Blankfein said his firm wanted in even as other Wall Street leaders remained cautious about trading the cryptocurrency. 

The promotion of Solomon indicates that Goldman is not only moving on from Blankfein but from his legacy as well. Blankfein took over Goldman in 2006, when the balance of power on Wall Street was shifting to traders. (Goldman’s previous CEO, Hank Paulson, had come up on the investment banking side of the firm.) That trading culture paid off in Blankfein’s first few years, and particularly during the financial crisis. But it also tarnished Goldman’s reputation and has been a dud recently. Regulations and shifts such as the rise of indexing have made Wall Street’s trading desks less profitable. Blankfein continued to pine for the old days. He has repeatedly said he would ramp up the firm’s risk-taking again if regulators would allow it.

Solomon, like Paulson before him, has spent much of his career as an investment banker. He ran investment banking at Bear Stearns, leaving well before that firm collapsed. Schwartz, the other logical candidate for CEO, came from commodities trading, like Blankfein. (Incidentally, so did President Donald Trump’s recently departed economic adviser Gary Cohn. The selection of Solomon suggests that Cohn might not have been the lock for Blankfein’s successor that everyone thought he was, even if hadn’t departed for Washington.) 

Solomon’s elevation resolves some of Goldman’s identity crisis. And it got the thumbs up from investors, who have become increasingly wary of Goldman’s continued embrace of risk. Shares of Goldman jumped almost $4 on the news on Monday, to nearly $275, before retreating somewhat. But it will also leave Solomon with plenty of tough decisions to make. 

Goldman, with more than 36,000 employees, has doubled in size since Paulson took over in 1999. It’s unclear whether a firm more focused on investment banking can support as large a cost structure. Less trading and less risk may lead to more predictable profits but also less opportunity for outsized gains and bonuses. Investors and employees will have to adjust accordingly. Trump’s regulators are probably more open to allowing Goldman to do an acquisition. But buying another bank would tilt Goldman further into the lending business, and perhaps dilute its white-shoe brand.

What is clear is that the sun is setting on the Blankfein era. The dawn of the Solomon era heralds less risk and quite possible less reward.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

Stephen Gandel is a Bloomberg Gadfly columnist covering equity markets. He was previously a deputy digital editor for Fortune and an economics blogger at Time. He has also covered finance and the housing market.

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To contact the editor responsible for this story: Daniel Niemi at

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