Former NY Fed President Corrigan To Be New Goldman Chairman - Report

Tom Burroughes

3 December 2008

Gerald Corrigan, a former president of the Federal Reserve Bank of New York, is being tapped by Goldman Sachs as chairman of its newly created bank holding company, according to the Financial Times.

Goldman and rival Morgan Stanley are transforming themselves into commercial banks, a move encouraged by the US government after the bankruptcy of investment bank Lehman Brothers.

Goldman made a step in that direction last week when the New York Banking Department announced that it had given approval to the formation of Goldman Sachs Bank USA, which consists of its Utah industrial loan company and various other capital-intensive units such as its loan and mortgage arms.

Mr Corrigan’s appointment, expected to be announced soon, comes as speculation mounts over Goldman’s strategic direction in its new incarnation – including whether it will buy another bank to build its deposits more quickly.

The firm is expected to post a loss for the quarter that ended last week as a result of the recent rout in the markets.

Meanwhile, Goldman’s intentions to build a wealth management business have hit some headwinds. Peter Scaturro, the New York global head of Goldman Sachs Private Wealth Management, is to leave the Wall Street bank at the end of this year, according to a Bloomberg report. Meanwhile, Pemille Jenson, head of UK private clients at Goldman Sachs, has left the firm. He previously had been co-head of Europe, along with Zurich-based Rene Mottas.

The FT said that in tapping Mr Corrigan as its chairman, Goldman is reaching out to a man that many consider among the best presidents the New York Fed has had.

Goldman Sachs faces a fourth-quarter loss of up to $2.2 billion, its first quarterly loss as a listed company, the FT quoted analysts as saying yesterday.