Mark Carney at Goldman Sachs: What did he do there?
Mark Carney is Canada’s 24th prime minister. Formerly governor of both the Bank of Canada and the Bank of England, Carney’s career began somewhere even more illustrious than either of those institutions: Goldman Sachs.
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Carney worked for Goldman Sachs International in its very early days. A biographical note from the UK parliament in 2012 said that Carney began his career at Goldman in London in 1988. He transferred to the firm’s Tokyo office in 1990 and spent another year there before leaving the firm for the University of Oxford, where he acquired a DPhil in economics. For a brief period, he attended the university at the same time as future UK chancellor of the exchequer George Osborne.
Carney returned to Goldman in London, in 1995, to be the bank’s co-head of sovereign risk. He transferred to New York in 1998 to work in “corporate finance”, including M&A. Then he moved again, to Toronto this time, in 2000, and made MD in 2002. He left Goldman for good in 2003. For a brief period, he worked at the firm at the same time as future UK prime minister Rishi Sunak. They probably didn’t meet there, though, as Sunak was in London at the time.
It was Carney’s time as co-head of sovereign risk that was perhaps the most exciting time in his career at Goldman. It’s not clear when exactly he resigned and moved to New York, but his work on the Russian financial crisis in August 1998 has been widely reported, including by Encyclopedia Britannica editor, Peter Kellner.
If Carney was Goldman’s co-head of sovereign risk as late as August, he was definitely very much aware of the collapse of infamous hedge fund Long Term Capital Management (LTCM). The fund's implosion was itself tied to the Russian financial crisis as well as the 1997 Asian financial crisis, which Carney was definitely co-head of sovereign risk for.
Why is that so important? Because Goldman Sachs didn't do badly from the LTCM situation.
In his book “More Money Than God”, Sebastian Mallaby said that former Goldman co-CEO Jon Corzine “himself conceded the possibility that Goldman “did things in markets that might have ended up hurting LTCM.”” This was after Goldman had a look at the hedge fund’s books and offered an unimaginably lowball takeover offer to the then-in-turmoil fund.
“The pre-deal due diligence would allow Goldman’s experts to see precisely what Long-Term owned and therefore precisely which trades would crater if Long-Term’s demise forced it to dump holdings,” Mallaby said. We're not saying Carney was implicated in anything untoward. We are saying that his time at Goldman Sachs was clearly a good preparation for running a Central Bank, and now a country facing a trade crisis that will require some cunning to resolve.
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