YouSaid · the spoken record

Stephen Scherr

lines on the record: 38
first: 2020-01-31
most recent: 2020-01-31
sittings or episodes: 1
sources: podcast

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“Yeah, maybe the bar. Well, look, I think in some sense, though, this is always the adage, you know, the kind of the work begins now. I mean, we can have a day and sort of celebrate the fact that we undertook something that was a very big and momentous event for the firm. But the sort of afterglow of that is going to burn out pretty quickly. And now we need to deliver. We've set targets for ourselves.”
2020-01-31 · Goldman Sachs Exchanges · Goldman Sachs CFO Stephen Scherr Recaps the Firm’s First-Ever Investor Day · IDENTIFIED FROM THE TRANSCRIPT
“So we have known each other. We've known each other probably for the better part of 20 years going all the way back to our investment banking days. In fact, I remember interviewing John Waldron when he came in as a lateral, and he and I were in the same MD class and the same partner class. And so there's some pictures floating around that, you know, age us all. I would say there's been very little surprise, honestly, in the way the three of us have engaged and worked. I mean, I think it's playing in much the way the three of us thought it would. You know, we have a lot to do. We started off, John and I kind of double teebing more than we probably needed to, but came to the fast realization that that wasn't necessary. And I think we now have kind of an informal division of labor. And I think it's working well and we speak to each other frequently and engage with each other. And so I think it's working as we had hoped it would.”
2020-01-31 · Goldman Sachs Exchanges · Goldman Sachs CFO Stephen Scherr Recaps the Firm’s First-Ever Investor Day · IDENTIFIED FROM THE TRANSCRIPT
“So you mentioned earlier that it's not typical for the entire C suite to turn over all at once, but it did happen in your case with David taking over the chairman's CEO job, Waldron taking over the president. COO job and you taking on the CFO job. Now, you've known each other for a long time, but what's surprised you about how that's come together and how have you managed to allocate your time?”
2020-01-31 · Goldman Sachs Exchanges · Goldman Sachs CFO Stephen Scherr Recaps the Firm’s First-Ever Investor Day · IDENTIFIED FROM THE TRANSCRIPT
“It's probably reflected most in the seat of the CFO, just in terms of the scope and range of engagements that I have over the course of a day or a week.”
2020-01-31 · Goldman Sachs Exchanges · Goldman Sachs CFO Stephen Scherr Recaps the Firm’s First-Ever Investor Day · IDENTIFIED FROM THE TRANSCRIPT
“So there's always, I mean, there's inevitably one week every quarter which has earnings intensity to it. And so I needless to say spend quite a bit of time on that. There are a number of functions, engagement around liquidity and capital and sort of conventional CFO stuff that I spend probably a third to a half of my time on. And then I spend a good deal of time in partnership with our technology area, with our compliance people, with legal on a variety of issues. Needless to say with Treasury and services and so forth. And so there's a wide sort of array of parts of the organization that I spend a good deal of time with. And I think it all feeds into the way in which we manage the firm, which is there's a certain partnership and a collection and a village that it takes to sort of run and manage the firm. I think it's part of the genius of the place.”
2020-01-31 · Goldman Sachs Exchanges · Goldman Sachs CFO Stephen Scherr Recaps the Firm’s First-Ever Investor Day · IDENTIFIED FROM THE TRANSCRIPT
“So being CFO Goldman's a little different than other banks and you run In addition to sort of the classic core CFO function, you run what Goldman calls the federation. How do you spend your time? Between the CFO job and what is a pretty big administrative job.”
2020-01-31 · Goldman Sachs Exchanges · Goldman Sachs CFO Stephen Scherr Recaps the Firm’s First-Ever Investor Day · IDENTIFIED FROM THE TRANSCRIPT
“Seems to be a common theme. Then had the letter go in a different way and came in and was a first year associate in FIG. And then my career has taken a pretty winding path from investment banking into the securities business and through capital markets, into our financing group, through strategy and consumer, and then finding myself in the seat of the CFO. You know, I suspect that I come to this latest position as the CFO, you know, being the beneficiary, though it wasn't necessarily intended that way, of having seen a lot of this firm, you know, from different perspectives and not just one. And it helps in the context of thinking about, you know, how to partner with David and John in running the organization and all that comes with being the CFO of the firm. And so it came through a wandering path. And I think it's been a fun 26 years. And the 27th year is proving to be.”
2020-01-31 · Goldman Sachs Exchanges · Goldman Sachs CFO Stephen Scherr Recaps the Firm’s First-Ever Investor Day · IDENTIFIED FROM THE TRANSCRIPT
“Well, both were a little random. How did I get here? So I practiced law for about a year and a half before coming to Goldman in 1993.”
2020-01-31 · Goldman Sachs Exchanges · Goldman Sachs CFO Stephen Scherr Recaps the Firm’s First-Ever Investor Day · IDENTIFIED FROM THE TRANSCRIPT
“To this firm, including focus on clients and customers that's not leaving the house, notwithstanding the fact that we may have different elements and sort of cultural winds that are blowing through. I think the firm is still quite core to the principles that's made it successful for as long as it's been.”
2020-01-31 · Goldman Sachs Exchanges · Goldman Sachs CFO Stephen Scherr Recaps the Firm’s First-Ever Investor Day · IDENTIFIED FROM THE TRANSCRIPT
“I think the firm's dealing with it quite well. I mean, you know, it bears understanding that the firm had a very big change come upon it a year and a half ago, which is David came in as the new CEO. And by the way, it's not typical that the entire C-suite changes, but it did with both John and I joining David. And so that brings about change. And change can sometimes be quite refreshing inside an organization. It gives lift to a new energy and a new direction. And I think some of what David is doing is putting his own imprint on the organization. But I would say, you know, notwithstanding the initiatives you mentioned, different dress, et cetera, et cetera, I think that, you know, David is equally quite attuned to the core elements and principles that have driven this organization for 150 years. So I don't think we should lose sight of the fact that there are some deep foundational elements.”
2020-01-31 · Goldman Sachs Exchanges · Goldman Sachs CFO Stephen Scherr Recaps the Firm’s First-Ever Investor Day · IDENTIFIED FROM THE TRANSCRIPT
“We want global markets to take lift. We look at asset management in the broad spectrum of our offering, and we look at consumer and wealth management as a dedicated set of businesses toward the individual as a client of the firm. And I think that resonated with people. The notion that we took INL and disassembled it and took those businesses and put lending and other activities in the businesses and in the segments that bear responsibility for it was a very good sort of formal step to do it. And I think equally the orchestration of all of this and the choreography of it played really well, meaning we came back out of the new year and first about a week to 10 days ahead of earnings gave people the new segments, the description of them. It gave people time to digest it. Then we did earnings and then two weeks later did the Investor Day all on the basis of the new segments and the kind of new window into the firm.”
2020-01-31 · Goldman Sachs Exchanges · Goldman Sachs CFO Stephen Scherr Recaps the Firm’s First-Ever Investor Day · IDENTIFIED FROM THE TRANSCRIPT
“About that new model. Yeah, so I think the resegmenting actually played to the high side, higher than my own expectations, just in terms of market reaction to it. You know, you always come at these things and you think, and as I know you think, you know, you try to look for where's the cynical reaction going to come? And truth was, there was very little cynicism expressed about what we did in early January in terms of the new segments, in part because I think it lays out the business of the firm in kind of very straightforward terms and it doesn't cause people to have to think and guess what sits where. It is a very good blueprint for the forward direction that this firm is taking. And I think it was a very sort of clear manifestation of what David, John, and I had been talking about for the better part of a year, which is”
2020-01-31 · Goldman Sachs Exchanges · Goldman Sachs CFO Stephen Scherr Recaps the Firm’s First-Ever Investor Day · IDENTIFIED FROM THE TRANSCRIPT
“We had a busy year. So you said one of the ideas around the whole resegmentation or changing the way we report was to give more transparency to the business, help people understand it. How do you think that's played out? How's the market reacting to that? What do investors feel about that? I think a new model.”
2020-01-31 · Goldman Sachs Exchanges · Goldman Sachs CFO Stephen Scherr Recaps the Firm’s First-Ever Investor Day · IDENTIFIED FROM THE TRANSCRIPT
“People, what we have, and equally where our ambition lies in terms of taking that business along a different alternative path and bringing in third-party money and the fee income that has the potential to be derived from it. So I think it was a very good day in that regard.”
2020-01-31 · Goldman Sachs Exchanges · Goldman Sachs CFO Stephen Scherr Recaps the Firm’s First-Ever Investor Day · IDENTIFIED FROM THE TRANSCRIPT
“For investors. Yeah. Well, I heard the same comment where have you been and why haven't you been talking about this? And I think there's some validity to that. I mean, I think one of the benefits of this push toward transparency in kind of all of its forms is that we will awaken people to sort of strengthen our business, frankly in and outside the firm, that nobody had a full appreciation for. And I think asset management is probably not alone, but it may be the most significant of it, which is I don't think people had a sense of just the breadth and scope and diversity of the offering that we had. And in the absence of that information, drew their own conclusions about perhaps a certain competitive inferiority to the business that in point of fact is very different than the reality. But I think Julian and Tim did a great job yesterday at really opening the aperture on that lens and showing”
2020-01-31 · Goldman Sachs Exchanges · Goldman Sachs CFO Stephen Scherr Recaps the Firm’s First-Ever Investor Day · IDENTIFIED FROM THE TRANSCRIPT
“So one of the things that I think caught a lot of people's eye was the story around asset management. People knew we're investment bank. People knew we have a big global markets business. What I don't think people appreciated was the size, scale, and sort of performance of that asset management business. And in my short tenure here, it's grown from 900 billion up to over $2 trillion in asset management. Talk a little bit about how that part of”
2020-01-31 · Goldman Sachs Exchanges · Goldman Sachs CFO Stephen Scherr Recaps the Firm’s First-Ever Investor Day · IDENTIFIED FROM THE TRANSCRIPT
“Plan for the firm. And as I also said in my remark, in the embrace of the bank and looking to lower our cost of funds because we are a bank, we're not looking to sort of depart from what we know to be our core strength, which is a lot of what you described. We remain a formidable investment bank. We remain a formidable trading house and intermediary of capital. I just want us to do that using lower cost of funding as an input. Being a bank helps us do that. And so that's what we're embracing in the first instance. And I think we came to a later realization of that, perhaps than we should have, but here we are, and I think we're at a moment now where we can do this on a different platform than where competitive banks are. We're not going to build branches. We're going to do this on a digital basis. And I think both on the asset and liability side, there's opportunity for us to grow and grow the firm.”
2020-01-31 · Goldman Sachs Exchanges · Goldman Sachs CFO Stephen Scherr Recaps the Firm’s First-Ever Investor Day · IDENTIFIED FROM THE TRANSCRIPT
“As it were Yeah, I don't think we have in mind a model that we're evolving to other than the one we care to set for ourselves as a bank. So we will be a bank, we are a bank, but we're going to embrace the bank model on our own terms, meaning we're not racing to become JPMorgan or another bank. Why did it take so long? I think for a long time, we quite like the businesses that we were in and didn't feel a particular need to sort of play to what comes of being a bank, meaning capital markets activities, trading activities and the like were where we were living. And I think what we were late to is recognizing the value of funding that comes or the benefits of funding that may come through the embrace of the bank. And I think for us, most meaningfully and at the early stages of this, embrace of the bank model is a lot about embracing a more diversified, less credit sensitive funding.”
2020-01-31 · Goldman Sachs Exchanges · Goldman Sachs CFO Stephen Scherr Recaps the Firm’s First-Ever Investor Day · IDENTIFIED FROM THE TRANSCRIPT
“So, will we. Correct. So for 100, Goldman's been around for 150 years, for roughly 140 of those years, it was an investment bank, a pure investment bank and trading house at some level. So recently, obviously, the firm became a bank in the wake of the financial crisis.”
2020-01-31 · Goldman Sachs Exchanges · Goldman Sachs CFO Stephen Scherr Recaps the Firm’s First-Ever Investor Day · IDENTIFIED FROM THE TRANSCRIPT
“Hoping that nothing happens. We are risk managers and therefore need to anticipate what might happen. And in the context of what might happen, whether our economists are forecasting it or not, we have plans for how we will manage the firm and what we will do about risk and overall exposure in the context of an economy that then shifts. Just one last point on this. I think an important point to make is I said in my remarks in my presentation we are not beholden to lending targets, meaning, you know, let's just take our consumer business. It's not a startup outside Goldman Sachs. It's a startup inside Goldman Sachs. It's not playing for its round B or round C funding. It's not looking to achieve lofty objectives if those objectives are inconsistent with where the market is. And so we don't play to a lending target. We have a budget. We know where we will be, but it is based on an assumption.”
2020-01-31 · Goldman Sachs Exchanges · Goldman Sachs CFO Stephen Scherr Recaps the Firm’s First-Ever Investor Day · IDENTIFIED FROM THE TRANSCRIPT
“So, I'll kind of answer that question two ways. One is it relates to what we set out. What we set out by way of our targets and our performance, we did in a way that almost every other bank does, which is we do not try to forecast a meaningful upside or as is embedded in your question, a meaningful downside, meaning so long as the market and the economy behaves within a fairly narrow range of where we are, these are the results that we think we can produce and other banks do it exactly the same way. If there is a material falloff, so we hit a recession or some other circumstance impacts the economy and therefore impacts our performance, I think investors understand that the achievement of our targets will be different, right, than what we have otherwise articulated. The other way to answer the question, which is less about our targets and more about the firm, is the firm operates with, in a sense, a recession playbook, meaning we're not”
2020-01-31 · Goldman Sachs Exchanges · Goldman Sachs CFO Stephen Scherr Recaps the Firm’s First-Ever Investor Day · IDENTIFIED FROM THE TRANSCRIPT
“Line in the context of what we can deliver, but I think they are ambitious enough. And candidly, as I pointed out to investors yesterday, these are not defining of what our ambition is. Our ambition is to exceed the targets that we have set for ourselves. And I think as David said in a response to a question that was asked of him, we're not asking people to go to sleep now for three years and in three years wake up and we'll tell them if we hit or not. This will be a progression. And if and to the extent we start to do better, then there's always the possibility of upping the ante and recalibrating where our objectives sit.”
2020-01-31 · Goldman Sachs Exchanges · Goldman Sachs CFO Stephen Scherr Recaps the Firm’s First-Ever Investor Day · IDENTIFIED FROM THE TRANSCRIPT
“Well, we all have slightly different business models, so you know what one bank can return will be different than another. Some banks have a bigger, much bigger consumer business. Other banks have less so. And so the comparison sometimes can be reflected in the different business models that exist. I heard the same view. In fact, going into the day, you know, my assumption was we would be criticized to the extent that people felt maybe we were a bit soft and not as aggressive or ambitious in the returns. This is the first time we put targets out. And I think if we meet them, and I'm confident we will, and it will take the organization to deliver on them, we'll be quite content, as will the investors in terms of what we will have achieved. But there's some element of conservative bias in them. We, for the first time, did a three-year model, for the first time put out targets, and we didn't leave ourselves sort of right up to the”
2020-01-31 · Goldman Sachs Exchanges · Goldman Sachs CFO Stephen Scherr Recaps the Firm’s First-Ever Investor Day · IDENTIFIED FROM THE TRANSCRIPT
“Starting a business to something, correct? So, one critique that we've heard from analysts and others is that the 13% ROE is not exactly aspirational relative to some of our peers. How do you think about our competitive position relative to the other banks in that 13% target?”
2020-01-31 · Goldman Sachs Exchanges · Goldman Sachs CFO Stephen Scherr Recaps the Firm’s First-Ever Investor Day · IDENTIFIED FROM THE TRANSCRIPT
“It hits the bottom line of the firm. So the challenge in that, the burden that it puts upon the firm, particularly as you grow a business, so let's take the Apple card business. You start from zero, and as you grow out that portfolio, you are building a reserve in the context of the size and magnitude of the portfolio you're building. That burdens the business during the growth phase. Because when you hit a point of maturity, the easiest way to think about it is you've taken a reserve. Loans leave, loans come in. When you're substituting one for the next, it doesn't change your reserve. So when you hit a fairly steady state, the impact of that reserve is rather muted. But when you're in a growth phase, this is a punishing proposition. And so we're feeling that. And we were quite open with people yesterday during the investor day, but equally, I've done it on the calls where we're quite clear that this will have a fairly significant impact. And it's the cost of growth.”
2020-01-31 · Goldman Sachs Exchanges · Goldman Sachs CFO Stephen Scherr Recaps the Firm’s First-Ever Investor Day · IDENTIFIED FROM THE TRANSCRIPT
“The reserve is a reserve against the possibility Or potential loss that you will incur as it relates to that loan or a portfolio of loans. So you set aside some amount of money that you hold out for the potential for loss. So it is not. Economic loss in and of itself.”
2020-01-31 · Goldman Sachs Exchanges · Goldman Sachs CFO Stephen Scherr Recaps the Firm’s First-Ever Investor Day · IDENTIFIED FROM THE TRANSCRIPT
“Sure. So whenever you extend credit, whether it's to a consumer or otherwise, you take a reserve. There are accounting rules that determine how much that reserve needs to be.”
2020-01-31 · Goldman Sachs Exchanges · Goldman Sachs CFO Stephen Scherr Recaps the Firm’s First-Ever Investor Day · IDENTIFIED FROM THE TRANSCRIPT
“Potential of what those businesses can produce, both to the returns of the firm over the longer term. So call it five years or more. Because these are businesses that will still be on the upward slope to get to their maturity level, and we will still be investing heavily in them. And so the returns from those businesses within a three-year period is more muted than I think what they will demonstrate over the longer term, which is why we equally said in addition to setting greater than 13% ROE or 14% ROTE, is that we would hit at least mid teens as you look at the longer term horizon for the firm itself.”
2020-01-31 · Goldman Sachs Exchanges · Goldman Sachs CFO Stephen Scherr Recaps the Firm’s First-Ever Investor Day · IDENTIFIED FROM THE TRANSCRIPT
“Well, I think the drivers of those returns are going to be several things. One, just in our base core incumbent businesses, businesses that have defined Goldman Sachs for the better part of our history, those businesses have room to grow and areas in which they can expand. And so they will, whether that's investment banking or the securities business or investment management or the like, all of them have opportunity for growth and will harvest that growth in the context of building some momentum around an increasing ROE. I think the second piece are the newer businesses we're in. So think of Marcus and the consumer business or Apple card or transaction banking where over a three-year period they will start to reach a level of maturity where they will start to throw off incremental revenue and do that on a higher marginal margin. Now the interesting bit about that component of it is that a three-year window for those businesses doesn't in my mind really reflect the true”
2020-01-31 · Goldman Sachs Exchanges · Goldman Sachs CFO Stephen Scherr Recaps the Firm’s First-Ever Investor Day · IDENTIFIED FROM THE TRANSCRIPT
“So, one of the targets that you put out there is a minimum 13% ROE in the medium term, which we defined as three years. For those who weren't necessarily absorbing everything that went on that day or weren't there, it's going to drive those higher returns.”
2020-01-31 · Goldman Sachs Exchanges · Goldman Sachs CFO Stephen Scherr Recaps the Firm’s First-Ever Investor Day · IDENTIFIED FROM THE TRANSCRIPT
“going and being led by a group of people who come with considerable history and pedigree and so the person who said to me that you showed Goldman to be a more investable proposition I think was reflecting on all elements that I went through businesses that are edgy commanding market share very self-aware of where they are or opening up a window onto a profile of the business not known all of that I think is even more significant than putting out specific targets themselves because again people are now going to look at us in a different light and think about the forward of the firm which I think holds you know enormous promise and importantly I think they do as well”
2020-01-31 · Goldman Sachs Exchanges · Goldman Sachs CFO Stephen Scherr Recaps the Firm’s First-Ever Investor Day · IDENTIFIED FROM THE TRANSCRIPT
“No, correct. Of the asset managers. Correct. I mean, we knew it and assumed others knew it as well. But in point of fact, they didn't. And I think opening that window onto that business gave investors ever more to chew on about the forward proposition of the firm. I think we show them a consumer and wealth management division, you know, that on one hand has historically owned a very enviable business in terms of its ultra-high net worth. But I think showed considerable promise at being what we want, which is an edgy, aggressive, growing, forward-looking digital consumer bank that spans a range of different wealth strata. And I think that was a very forward and positive view on the firm. And then I think as a general matter, you know, we showed ourselves to carry kind of forward engineering prowess to put at the business which is now organized and very clear-eyed about where it's going.”
2020-01-31 · Goldman Sachs Exchanges · Goldman Sachs CFO Stephen Scherr Recaps the Firm’s First-Ever Investor Day · IDENTIFIED FROM THE TRANSCRIPT
“Its commanding position competitively. It saw a global markets division that recognizes where it sits at an inflection point in the market, not particular to Goldman, but to the market. And I think rendered a very candid and clear-eyed assessment of what their challenges are, but equally the direction they're going to meet them, including building platforms, staying edgy, acknowledging. Is quite a formidable sort of picture to be drawn. They saw an asset management business that is bigger, broader, deeper, more durable than they had imagined. And I think opening that lens, as you and I talked about, I think was a very big deal in the context of the Investor Day.”
2020-01-31 · Goldman Sachs Exchanges · Goldman Sachs CFO Stephen Scherr Recaps the Firm’s First-Ever Investor Day · IDENTIFIED FROM THE TRANSCRIPT
“So I did spend quite a bit of time after the event with our investors. And, you know, people were fielding a range of different questions, but someone came up to me and in giving me feedback gave in a very succinct way what I thought was the most profound that I had heard, which is he felt that the firm rendered itself more investable on the back of the investor day, meaning we gave the community, the investor community quite a bit to digest and to think about in terms of what the forward proposition was for the firm. And I think in looking back, putting aside the bill of particulars on the targets, I think what people saw was quite impressive. I mean, I think they just go through the segments for a moment. They saw a firm that has an investment bank that is beyond formidable in terms of its position, but still strives to achieve ever more.”
2020-01-31 · Goldman Sachs Exchanges · Goldman Sachs CFO Stephen Scherr Recaps the Firm’s First-Ever Investor Day · IDENTIFIED FROM THE TRANSCRIPT
“A medium or long term plan given the investments that we're making. And so that was the foundation of it. It was a three-year business plan for the firm. And off of that, you know, we looked at targets that we could articulate at the enterprise level and some at certain businesses as to what people should expect and hold us accountable for.”
2020-01-31 · Goldman Sachs Exchanges · Goldman Sachs CFO Stephen Scherr Recaps the Firm’s First-Ever Investor Day · IDENTIFIED FROM THE TRANSCRIPT
“Some goals there. Yeah. I first would have to say that I think the investor relations team led by Heather Minor did an extraordinary job at putting this together. You know, what went into this at the beginning was a view that David, John, and I had, which was we wanted to run the firm in a more transparent way, meaning the firm needed to open itself up and explain to people why it was worthy of engaging with the firm, either as an investor or, frankly speaking, to engage us, you know, in business. And I also would say that I think for many of the 40,000 people who work at the firm, this was an exercise equally at exposing the firm to them in ways we hadn't before. The foundation to all of this was a three-year model that we started to develop, which frankly we hadn't had for 150 years either. And so we started to plan. And that's not to say that you can predict what the markets look like a year, two years, three years from now, but you need to start to plan and set up.”
2020-01-31 · Goldman Sachs Exchanges · Goldman Sachs CFO Stephen Scherr Recaps the Firm’s First-Ever Investor Day · IDENTIFIED FROM THE TRANSCRIPT
“So obviously, the idea was to sort of explain the firm to an external audience, but talk about the internal dynamic. What went into preparing it, and what did we learn by going through the process of setting these targets and putting out some goals there?”
2020-01-31 · Goldman Sachs Exchanges · Goldman Sachs CFO Stephen Scherr Recaps the Firm’s First-Ever Investor Day · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so the day was an interesting one. I mean, when we said we opened the firm, we literally opened the firm. And so the front doors were open and four or five hundred people came marching in. And I think they came away with a view that the firm was quite genuine in its intent to be more transparent and engaging with them. And we were. That was our intention. And I think they came away with a better understanding, not just of targets and facts and figures, but I equally think they came away with a more general sense or a better sense of who we are, depth of talent, who's running the firm in a broader sense. Equally, I think they came away with a view about our technology given what we had on display. And so I think the firm showed well in the context of opening its doors and letting people in.”
2020-01-31 · Goldman Sachs Exchanges · Goldman Sachs CFO Stephen Scherr Recaps the Firm’s First-Ever Investor Day · IDENTIFIED FROM THE TRANSCRIPT