Cohn quits Goldman to head National Economic Council

Donald Trump has named Goldman Sachs president Gary Cohn to head the White House National Economic Council, marking his third top appointment from the ranks of the bank despite his pledge to sever links between Wall Street and Washington.

The appointment of Mr Cohn, who serves as chief operating officer, leaves Goldman nursing another big departure from its leadership team just weeks after the news that the co-head of its investment bank, Michael Sherwood, will leave next year.

The departures mark an unusual period of turbulence at the top of Goldman, which has had the most settled senior team among the major Wall Street banks since the financial crisis.

JPMorgan Chasehas seen a series of succession candidates to Jamie Dimon leave the bank, either of their volition or not, while Citigroup, Bank of Americaand Morgan Stanleyhave changed their chief executives since 2008.

The Trump transition team confirmed the appointment on Monday. Mr Cohn will join Steven Mnuchin, a 17-year Goldman veteran who left the bank in 2002 and has been nominated for Treasury secretary. Mr Trump last month named Steve Bannon, his campaign chief executive and former Goldman banker, as his chief strategist.

In announcing the appointment, Mr Trump said that Mr Cohn would “put his talents as a highly successful businessman to work for the American people” and would create policies that would “grow wages for our workers, stop the exodus of jobs overseas and create many great new opportunities for Americans who have been struggling”.

The appointments of three people connected to Goldman have sparked criticism that Mr Trump is abandoning his vow to “drain the swamp” of the rich and powerful in the corridors of power in Washington. Mr Trump has also tapped Wilbur Ross, the billionaire investor, as his commerce secretary, as he builds what is being billed as the wealthiest cabinet in modern US history.

While Mr Cohn ultimately tired of waiting to succeed Lloyd Blankfein as chief executive, he enjoyed more authority than any other second-in-command on Wall Street, taking charge of the bank’s balance sheet and operations and then adding more roles as Mr Blankfein battled cancer.

During the financial crisis, he had already assumed a great deal of power, leading talks with Federal Reserve officials about possible mergers with Citigroup and Merrill Lynch.

Mr Blankfein said on Monday: “Gary and I have been partners for more than 25 years, so I know better than perhaps anyone that he has the intelligence, commitment and experience to be successful at any endeavour he undertakes. We will miss Gary at Goldman Sachs, but I believe the American people and the president-elect are fortunate that he has chosen to serve his country.”

Unlike many of Mr Trump’s cabinet, Mr Cohn does not come from a rich family. However, the value of his Goldman shares, which has risen since Mr Trump’s election, is more than $210m.

Karl Frisch, head of the non-profit Allied Progress, recently said that the move to tap Mr Cohn was “further proof he doesn’t plan on keeping his word with workers”.

After 25 years at Goldman, Mr Cohn was seen as a potential successor to Mr Blankfein. Mr Sherwood, dubbed Woody, had also been seen as a potential future CEO.

Goldman declined to comment on the implications of Mr Cohn’s departure for its succession planning. Goldman’s chief financial officer Harvey Schwartz and co-head of investment banking David Solomon are tipped to be named as co-presidents to replace Mr Cohn. Shares in the bank fell slightly on Monday morning but are up on the past five days.

Analysts in New York said that they were not worried about a talent drain. “We don’t see any real disruption,” said Guy Moszkowski, banks analyst at Autonomous.

“Mr Blankfein has made it pretty clear that he has no intention of leaving his CEO post anytime soon. Plus, Goldman has a deep bench of talent and a long history of co-heads, of key businesses and at the top of the house.”

Mike Mayo, analyst at CLSA, said that Mr Cohn’s exit could actually help the bank. “In a perverse way, an exit by Cohn can help keep the next rung of potential leaders around for longer,” he said. “A certain degree of change is good to keep the management flow upwards continuing.”