Comes on the heels of a disappointing quarter that saw the firm notch its worst ever results in the commodities business they say this is kbws note today we have more questions than answers about the franchises health at this point in time. Should we . Well. You take one quarter two quarters of bad trading yeah, we can ask the question. I think the question is a little bit bigger than one or two quarters this is a firm that over decades has had a little bit of a tugofwar going between Investment Banking on one hand and trading on the other hand. Youve had a guy at the helm for ten years thats a trader extraordinaire in years past youve had Investment Bankers like hank paulson running the firm i think the question is where are the Investment Bankers picking up slack from the trading which in the last two quarters hasnt done so well is it time to rethink owning this stock it is time to rethink it but when you rethink it youll come out its 1. 2 times book value. It can get a little bit cheaper but this is probably a good price on a price to book basis at which to own the stock. There is still this question as dick bove is putting out there josh, year to date goldmans down 7 versus Morgan Stanley which is up 9 , as is bank citis up 12. 5 . Jpmorgan is up 6 . Theyre disappointing with the stock performance, no doubt. But do you make a bigger issue out of it asking whether you should own gs . I dont own gs. I think two things the first is, ficc, when has that not been a mercurial business like why are we looking for consistent results all of a sudden in an area fixed income, currencies and commodities. It is not a secular issue because Morgan Stanley just put up a good quarter. So clearly you are going to have some quarters where one bank does better than the other thats number two. The third thing i would say is, this is a unique situation because were in a bull market for bonds, for u. S. Stocks, for international stocks, for m a. All these things this is like the first bull market i can think of where wall street wasnt absolutely just feasting so it is weird to see goldman in this position. I just dont know that id be like the guy to say, yeah, thats it, theres like this terminal problem with the greatest Investment Banking franchise of all time. I dont see it that way. The good thing is, you dont have to be because our next guest is that guy. With Goldman Sachs shares under pressure, some are placing the blame on Lloyd Blankfein, the ceo. Dick bove, an Influential Bank analyst who is calling for the ouster of mr. Blankfein. In the last year or so ive been write the about the lost decade if you go back to 2007 the company was making more money than it is making today. Over the last five years, revenues have flatlined, theyve not gone anywhere. Not only have they flatlined, but by 2016 if you were saying the average was around 33 billion, 36 billion a year, they couldnt even do that so far this year theyre not going to do what they did in 2016 and the reason for the problem is that they made a business decision ten years ago, which is that this market is going to come back. Well, it didnt. And the fact of the matter is that instead of taking moves the way Morgan Stanley clearly did, the way citigroup did, the way a number of other large bankers have, this company has simply gotten more and more insular it is a private company thats running under a public if you will name this stock sold at 250 back when Lloyd Blankfein first began there. Its selling at 30 less today thats ten years which company can you find out there that has a record as consistently bad as this one where Everybody Loves it it is not a phenomenal franchise if the company cant grow earnings over the last five years the stock price at Goldman Sachs is up 135 . If if you look at the key metrics of management performance and profitability, return on equity, nearly doubled over the last five years operating margins, near the top of the group second only of the major firms to jpmorgan. The way that blankfein guided goldman through the crisis the is there a better risk manager i would take jamie dimon first, if theres babe ruth, id take gehrig second. What about those metrics dont they account for anything . Youre picking your point of entry, right you decide you want to take a point of entry five years ago. Why dont you pick your point of entry ten years ago . If you take your point of entry ten years ago, all the metrics you are talking about are negative none of them are positive. In addition to which james gorman is the babe ruth, if you will jamie dimon is a babe ruth, if you will youve even seen Brian Moynihan at bank of america who is a babe ruth, if you will. These people have done something with their franchises. They have recognized that they were in an industry which had major secular changes impacting it, and they changed and they changed their company in a fashion to benefit their shareholders Goldman Sachs did not. And a iss a result of not doing that, his earnings have not gone up for ten years take your metrics back to 2007 dont start them in 2012 he did not guide this company through a period of constant improvement. He guided this company through a period of constant loss in share relative to the companies that i just mentioned some would suggest if Lloyd Blankfein is not there that goldman may not be there given what happened during the crisis. Why would they suggest such a thing given that Morgan Stanley is here . Bank of america is here . Citigroup which should not be here is here i have no idea why they would suggest such a thing i have no idea how this board gets away with doing what it is doing. I have no idea why a company which underperforms so consistently over such a long extended period of time is not even questioned by the marketplace. I mean, back in new york it is questioned by the marketplace, right there is a reason buy goldman shares are down year to date 7 . As i said, theres no comparison to the peers which are obviously up more substantially than that. All are in the green the xlf is up 7 that in and of itself tells a story that the market itself has begun perhaps to scrutinize goldman a little more. No yeah. And you got to look at that take a look at that 33 decline. No company does anything like that unless youve got years of problems that have accelerated within the company youve got a problem with the structure of the company there are Serious Problems within that division which the Company Refused to discuss yesterday. They just kept saying, commodities, commodities, commodities. You know, the fact of the matter is that its got to be more than commodities. 33 decline is outrageous. And it comes after years of problems in trying to get this business to turn around and move in a forward direction the Company Needs new leadership the Company Needs more than just a new Lloyd Blankfein. They need a shakeup of that board of directors that board of directors cares nothing about the shareholders of this company because theyve done nothing to protect the shareholders of this company this Company Needs change. I should also say, we reached out to goldman they have no comment they are likely watching right now because we alerted them that you were coming on, if they had a comment about your commentary. And they in fact say no. Steve weis has one though. Hey, dick, how are you . In some regards, every time you come on, it is like watching a mob. All you do is launch hand grenades if you look back ten years, youll see that the companies you cite had never hit the high they had in 2007 thats Morgan Stanley which is still about 30 below its 2000 highs. Thats citigroup which is about 90 below its 2007 highs and Goldman Sachs is the only one to have done that. I think Lloyd Blankfein has done a phenomenal job, and he will continue to do a phenomenal job. It is one quarter. It is a trading quarter. It is a tough market they are to be xhecommended for having this one quarter at this point in time a of a long, long history. The culture there is still the best on the street its ten years. Its not one quarter dick, look the a the chart. I looked at the chart i challenge you to give me any other bank in your universe that did what they did over the last ten years jpmorgan morgan, i agree those companies are not seeing their underlying Business Models fall apart. Those companies in the past if you will few years, not just you guys ought to fixate on one quarter fixate on the last few years were not fixating if anything, dick, it feels like youre fixating on a couple of quarters rather than a longer term story and looking at a stock price. Ten years of no earnings increase thats one quarter six years of not showing any revenue increases. Thats one quarter dick, gary cohn, the heir apparent is now with the regime. Who comes in here . Are you saying someone from outside or absolutely. Or is there someone within goldman . Someone you can go private and stop playing this game with public shareholders or bring someone in from the outside. As i was about to say, bny mellon has been successful now even though they have a very strong management core, they reached out and picked up Charlie Sharpe they recognize you need a constant reinvigoration of ideas, Goldman Sachs is an insular company. Everything is internal you cant get anything out of Goldman Sachs. Simple question was asked yesterday to Goldman Sachs, what is the Stock Buyback Program going to look like every other Financial Company has indicated what that is because its not a major issue were not going to tell you, is the answer were not going to tell you on basically anything its a private company that is paying its people well, that is showing no improvement over a tenyear period for earnings or revenues or any of the key metrics which would drive stock prices hold on if you guys disagree with this call from dick bove, you should also turn some of your ire on that side of the desk because jim labebenthal agrees. Let me explain it for fully this is a company that has a legacy of changing its culture right . Youve had Investment Bankers in charge through the 90s. Youve had dual heads with jon corzine, hank paulson, investment banker in the early 2000s. Now youve had a trader for the last ten years actually id like dicks response to this he was a trader let me finish, okay if you want to actually change this company and actually make it somewhat different, focus on the Investment Management division i was there 15 years ago, and i can tell you, you felt like a step child in that division. There needs to be leadership from that division to put them on par, in my opinion, with a Morgan Stanley, with a bank of america, with a merrill lynch, to put them on par with the traders and Investment Bankers i think the Investment Banking division is where the future of the industry is going to be. I said Investment Management. Maybe i twisted my words i mean the Investment Management division, which is smaller compared to Morgan Stanley by a lot yeah, it is obviously Morgan Stanley made a major, major play in that area the whole company took a bet on Investment Management, Wealth Management, and it is paying off in a major fashion but im a believer in Investment Banking. I think Investment Banking is where the future is for the Financial Services industry and i think the Investment Bankers should be running that company what id say to dick and to jim is that clearly, dick, your comments put a target on mr. Blankfeins back i think that there will be a target on the people who ran fixed income commodities trading, currencies, and all the rest at Goldman Sachs. I dont think this takes down lloyd. I think one of the people who are in charge of those divisions are worried right now after this report they were worried before report, and theyre worried now. Heres a point that we havent brought up, which is that Lloyd Blankfein and gary cohn are very close. If suddenly theres this move under foot to undermine Lloyd Blankfein, seems to me as a shareholders and director of the company, we should think is that better for shareholder if Lloyd Blankfein isnt there . Isnt it true in which the culture gary cohn was brought up was one in which we have an interest in the administration to preserve that and to enhance that i mean i would think that there is something that is not not in contrast to whats good for shareholders, but part of the same tune. Say this happened tomorrow. I think the market would be shocked and i do not think this is one of these situations where gs goes up on i think first of all, im going to disagree with you the culture has not changed at Goldman Sachs. The culture is one of the strongest on the street. I dont know where you get that. No, no, i totally disagree. Ill let you finish but i want to respond you can respond but i dont know how well you know the partners that have been at Goldman Sachs and there now. I know a lot of them very well the culture has not changed. Its not longterm greedy anymore. It just isnt. Its not longterm greedy. 15 years ago what Investment Management was doing is no relevance to what its doing today. You should be current on that. The other thing is jon corzine was before hank paulson and he was a trader gary cohn was a trader theres been Investment Bankers. Theres been changes in leadership over the years. Exactly right and the culture has stayed the same what dick bove is talking about is a company very dependent on trading revenues, and given what happened with the volcker rule, et cetera, they had to change their Business Model as a result, you dont have some of those blowout quarters in fixed income, commodities and currencies that you used to have Lloyd Blankfein is to be commended for changing, from morphing that company, as well as he did, without losing major profitability. There is a couple of points you are making there one is that there has been a structural and secular change in the trading of securities of every type, and anybody on that desk, as well as anybody in the business, is well aware of it. And therefore, Goldman Sachs should have changed with it. It didnt. Second thats not true but go ahead the term partners was just mentioned. Thats one of the key problems it is not a partnership. It is a shareholderowned company and the people who work for it are employees of the company and the shareholders they are not partners. They run it as if it is a partnerowned company. They run it as if it was a private organization it is not that it is a shareholderowned company. It has an obligation to increase its revenues, to increase its earnings it has an obligation to adjust to changes in the structure of the businesses which it services it is not doing any of the above. Whats more important to you . The share price . As an investor whats important to me is a share price i look at a company that over the last ten years has outperformed every other company except for jpmorgan. I would say it is a pretty damn good record. Its definitely outperformed the s p. Well, if you bought the stock when Lloyd Blankfein took over you didnt make any money. What have you bought the stock though in the aftermath of the crisis if you bought any of the financials right before the financial crisis the whole thing is you are picking the point in time you want to enter. The point is this company has not increased revenues or earnings for ten years and you are saying thats a wonderful record it is not a wonderful record are you rewarding bank of america for getting down to 3 you know where im going, right . There was a reason why Goldman Sachs didnt trade down to 3 a share. Right . Where were you then what was your recommendation on bank of america . Well, we were buying it oh. Dick, i appreciate your time. You knew the comments were going to draw some controversy it was a lot of fun it is good to talk to you today. Thank you dick bove you want to continue im going to elaborate the point and i will make it quick there is a difference i think youll probably agree with this in the nature of a relationship in Investment Banking versus trading if youre an investment banker, you are looking years and years to develop a relationship that if a transaction occurs, whether its capital raise, m a, whatever, you are the guy whose built that relationship over years. Trading is fundame