At a March town hall-style meeting in North Jersey, a woman named Linda told Phil Murphy that she was concerned about his Wall Street past. “What are you going to do for the little guy?” she asked.
It’s a question that still follows Murphy, 60, a former longtime Goldman Sachs executive and the Democratic nominee for governor in Tuesday’s election. His Republican opponent, Lt. Gov Kim Guadagno, is using Goldman against him.
Fairly or not, Goldman Sachs came to symbolize corporate greed like no other firm on Wall Street after the financial crisis. Nearly a decade later, voters are still suspicious of the financial industry and politicians who raise money from or give paid speeches to Wall Street firms.
That an investment banker is the odds-on favorite to be the next governor of New Jersey may seem incongruous with the rise of populism on the right and left. Yet Goldman has populated positions in governments of both parties for decades, and Murphy seems poised to continue that tradition.
As head of Goldman’s Frankfurt and Hong Kong offices, Murphy held leadership roles during a crucial time in history for both the firm and the countries where he worked: in Germany, privatizing of state-owned enterprises after the fall of the Berlin Wall; and in China as that country opened its economy to international markets.
Murphy retired from Goldman in 2003 after more than 20 years, then became finance chairman for the Democratic National Committee, and later served as ambassador to Germany under President Barack Obama.
Now the favorite to succeed Republican Gov. Christie, Murphy, who spent $20 million of his own money to help win the Democratic primary, is hoping to become the latest Goldman alumnus to jump to politics. A number of his contemporaries now work in President Trump’s White House, such as economic adviser Gary Cohn and Treasury Secretary Steven Mnuchin.
Then there’s Jon S. Corzine, a fellow Democrat who was ousted as Goldman’s co-CEO in 1999 and went on to be New Jersey governor.
For his part, Murphy “is like a classic Goldman archetype,” said William D. Cohan, author of Money and Power: How Goldman Sachs Came to Rule the World.
“In typical Goldman alum fashion, he uses his wealth and influence and connections to reinvent himself, which is the Goldman mantra,” he said, adding that he didn’t know Murphy personally and didn’t intend to be critical.
After graduating from Harvard and the Wharton School, Murphy joined the firm in the early 1980s. He made partner in 1992 and was soon dispatched to Frankfurt.
“I was viewed to be the mop-up guy at Goldman in many respects,” Murphy said in an interview. “If a business was on the rocks, I was on the short list of relievers to come in in the early innings. That’s why … they asked me to go to Germany.”
When Murphy arrived in Germany in 1993, the economy was a mess. Industry in the former East Germany wasn’t ready to compete in global markets — a big opportunity for investment banks.
Some of Goldman’s senior partners didn’t think the firm would be able to make significant inroads against German banks, especially Deutsche Bank.
But Murphy forged ahead, a “rising star and strong leader” who “swore and drank like the unabashed Irishman he was,” according to The Partnership: The Making of Goldman Sachs, a 2008 history by Charles D. Ellis.
Within a few years, Goldman was co-lead underwriter for the initial public offering of Deutsche Telekom, Germany’s telecommunications colossus, a $13 billion deal that generated big fees.
In 1997 Murphy became president of Goldman Sachs Asia just as a financial crisis roiled Thailand, Malaysia, Singapore, Hong Kong, China, South Korea, and elsewhere.
With markets down, Goldman and other banks were well-positioned to buy cheap assets and re-float them for higher prices. They also got deals advising troubled Asian governments and companies.
Just months after the International Monetary Fund approved a $57 billion bailout for South Korea, the country reached a turning point with a $4 billion bond sale in April 1998. Goldman helped manage the sale, the biggest sovereign debt offering in Asia.
“A lot of people sort of date the change of confidence, the change of the market, around the time of that bond deal,” said Michael Pettis, a professor of finance at the Guanghua School of Management at Peking University in Beijing. “Korea was sort of a linchpin for the region.”
As the head of Goldman’s Frankfurt and Hong Kong offices, Murphy was less involved in minutiae of individual deals than he was in managing personnel, meeting with regulators, and building relationships with foreign officials and business leaders.
Murphy “had to figure out how to mobilize all of Goldman Sachs on behalf of a client,” said a former partner who worked under Murphy, and who spoke on condition of anonymity. He also had “to adjust to local conditions” and explain strategy — not only to government and corporate clients, the partner said — but also to Goldman executives in New York and his employees in Hong Kong.
Some business dealings have attracted controversy.
Guadagno, 58, charges that Murphy is hiding important information about his former clients from voters to avoid scrutiny. She also points to Goldman’s underwriting of a stock issue by China’s state-run oil company, accused of financing human rights abuses. Yet Murphy was no longer working in Asia by the time the company sold shares to the public.
Murphy returned to the United States in 1999 to head Goldman’s brokerage business and then investment management for institutional and individual investors.
Back home, Goldman’s partners had been debating whether to take the firm public. For decades, it was structured as a partnership, meaning all the firm’s capital was contributed by individual partners. Opponents, including Murphy, worried that selling stock to the public would damage the firm’s culture and increase risk-taking.
Others, led by Corzine, a high-rolling bond trader, argued that the partnership stifled growth and exposed the partners to personal liability. Spreading risk with public shareholders was actually a stabilizing move, they said. By 1998, that view had prevailed.
Murphy liked the “connectivity of the partnership,” said one former partner. “You felt like you were part of something that was different.”
Murphy was “very much a culture carrier for the firm, someone who really believed in doing things the right way,” said Daniel Neidich, another former partner.
Cohan, the author, said the firm had to change “for competitive reasons. All their competitors were public and had access to far more abundant and cheap capital.”
Likely voters don’t seem to care about Murphy’s past: Just 30 percent say his work for Goldman has a negative impact on their opinion of him, according to an Oct. 25 Quinnipiac University poll.
Though he spent the bulk of his professional career at Goldman, Murphy rarely talks about it. At the town hall in March, he said he’d learned how jobs were created but also agreed banks deserve criticism because “they did in fact bring this country to its knees.”
Then he asked Linda and the audience to consider the whole “book” of his life, not just the Goldman chapter: growing up working-class outside Boston, serving on the board of the NAACP, chairing a women’s shelter.
Murphy also has promised to crack down on hedge funds and raise taxes on millionaires. “I don’t think anybody here is harder on Wall Street right now than I am,” he said during a primary debate.