By Geoff Colvin and Ryan Derousseau
April 26, 2016

Two leaders worth watching are in this morning’s news:

-Goldman Sachs chief Lloyd Blankfein may be making low-key but significant strategic changes at the company. Yesterday, it announced a new online banking operation open to one and all, with no minimum deposit, no transaction fees, and a 1.05% interest rate on accounts. Banking for the masses is pretty much the opposite of Goldman’s business model since it began, but it could make sense today. Regulators recently rejected the first draft of Goldman’s living will for unwinding itself if it failed, and retail deposits are the least risky source of funds. Online banking is the cheapest way to attract such deposits. Goldman isn’t launching the business from scratch; it bought the business from General Electric, which CEO Jeff Immelt is also taking in a new strategic direction by divesting most of its vast GE Capital business.

The online bank probably won’t be an important business for Goldman soon; it doesn’t offer checking accounts, and you can’t get at your money at ATMs. But it’s a platform that Goldman could expand in order to modify its model. Yesterday, as Goldman was announcing the new bank, analyst Dick Bove was issuing a report arguing that Goldman “needs to rethink its strategy and consider transformational changes in every aspect of its operations.” Bove says the company has suffered “a lost decade,” which happens to coincide with the tenure of Blankfein, who became CEO in 2006 after predecessor Hank Paulson became Treasury Secretary. Blankfein has shown no indication that he’s even thinking of retirement. It isn’t too late for him to redirect even so large a ship as Goldman.

-New York City Mayor Bill de Blasio may be in the early stages of a major scandal. I say “may be”—some facts are still muddled, and de Blasio so far hasn’t been personally connected to any disastrous revelations. But the signs are troubling. Let’s put it this way: When one of the city’s major daily newspapers runs an editorial headlined “Bill de Blasio is a liar who’s put City Hall up for sale,” as the New York Post did yesterday, things are not going well for the mayor. The Post is a strident foe of de Blasio and can be counted on to put the worst face on any news, but it was able to cite substantive evidence. The state Board of Elections has alleged illegal fundraising by a group called Team de Blasio and referred the matter to Manhattan D.A. Cyrus R. Vance Jr. The board’s report says Team de Blasio evaded campaign donation limits to individual candidates for the state legislature by channeling hundreds of thousands of dollars for them through party committees; when the committees then transferred the money to the candidates, some of the checks had “donation per Mayor” on the memo line.

A number of potential corruption incidents have also come very close to de Blasio. This is shaping up as a classic case of accelerating investigations by regulators, prosecutors, and the media, probably leading to more revelations. How de Blasio manages the incipient crisis will influence, and may even define, his performance as leader of America’s largest city.

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