Goldman’s Ex-Chief, John C. Whitehead, Is Downtown’s Czar

A Navy veteran, John C. Whitehead piloted landing craft to the shore in the bloody landings at Normandy and Iwo Jima. He retired (for the first time) in 1984. He has lived long enough to see the investment firm he once headed, Goldman Sachs, grow from a 200-person outfit into a global powerhouse. He has watched a Gdansk electrician he met while serving as a Deputy Secretary of State, Lech Walesa, become the leader of a free Poland, and a young banker he turned down for a job, Michael Bloomberg, elected Mayor.

He has, in short, led a productive life. So it’s understandable that when Governor George Pataki called Mr. Whitehead at his office last month and asked him to be the chairman of the new Lower Manhattan Redevelopment Corporation, presiding over the biggest rebuilding project Manhattan has ever seen, the banker asked for a little time to consider the offer.

“I was very reluctant to take it-that was my immediate instinct,” Mr. Whitehead said recently. “You know, I’m 79 years old. I’ve done a lot of things. I was looking forward to a little more peaceful existence.”

But not long after Mr. Whitehead hung up with the Governor, his phone began to ring. Old friends, like developer Jerry Speyer and Bill McDonough, the president of the Federal Reserve Bank of New York, had heard about Mr. Pataki’s offer. They appealed to his sense of duty, Mr. Whitehead said, “twisting my arm to please say yes.” Soon enough, he did.

Mr. Whitehead’s was not the most prominent name to be floated for the rebuilding job-early speculation, encouraged by Mr. Pataki, focused on Mayor Rudolph Giuliani. Even now, as he prepares for the daunting task ahead, Mr. Whitehead remains something of an unknown quantity in New York’s political and real-estate circles. But after spending 37 years at Goldman Sachs and four years in the Reagan administration, he is widely revered on Wall Street and well known among the national Republicans who control federal aid. As it happens, those are the very fronts that matter most to the Governor. At a dismal moment in the city’s history, when some big financial firms are fleeing the rubble downtown, Mr. Whitehead’s appointment was meant to send a signal to the bankers and the G.O.P.: The city is in a wise man’s hands. In a time of crisis, Mr. Whitehead would be Mr. Pataki’s Felix Rohatyn.

“John Whitehead was always-and I use this [term] very precisely-a visionary,” said Senator Jon Corzine, a Democrat, who used to work for Mr. Whitehead at Goldman Sachs, and who eventually became the firm’s chief executive.

On Dec. 20, when the new board meets for the first time, Mr. Whitehead will begin to face what he describes as his last-and immense-challenge. Billions of dollars in government aid will go into the rebuilding project. It will be his job to decide how that money is spent. There are innumerable parties that want a say-developers with claims to the site, survivors who don’t want it developed at all, residents who want peace, quiet and normalcy, politicians who want credit-and Mr. Whitehead, the onetime diplomat, will have to mediate among them.

“I think what he’s taken on with this thing, he’s taken a big bite,” said John L. Weinberg, his old friend and former co-chairman at Goldman Sachs. “I told him, ‘Everybody’s going to be against you.’ God knows how he’s going to work it out. But he’s tough … and he’s got all his marbles.”

“It’s a wicked job,” Mr. Whitehead said. “I will get it well started, health permitting.”

Mr. Whitehead admits that he’s still getting his footing in New York politics. Already, however, he’s proven to have a certain plain-spoken touch. On Dec. 14, Mr. Whitehead made what was essentially his public debut at a breakfast meeting of the Association for a Better New York. Speaking to an audience that included Larry Silverstein, the developer who controls a 99-year lease on the site, former Mayor David Dinkins and former Nebraska Senator Bob Kerrey, the white-haired Mr. Whitehead charmed the crowd with his avuncular manner and a refreshing willingness to share how much he didn’t know about development.

He also outlined his vision for a new downtown-ideas he shared, in his first extensive interview on the subject, with The Observer . Mr. Whitehead envisions a redevelopment project akin to the one that produced Rockefeller Center during the Depression. He foresees new rail-transportation links to downtown. He wants a monument to commemorate the 3,000 victims, but says it need not be huge. “The Lincoln Memorial, the Jefferson Memorial, those are not on huge sites,” he said. “They’re on relatively small but beautiful sites. And we must build something the same.”

He rejected the suggestions of some-including Mr. Giuliani-who say the entire site should be left undeveloped. “The site as a whole property is very large, and I don’t think it would be feasible, [or] that people would really want a huge park that would cover the entire site,” he said.

Instead, Mr. Whitehead said, a large portion of the 16 acres should be devoted to commercial office buildings, erected as the demand for them-currently nonexistent-dictates.

Mr. Whitehead said he’s had a “long meeting” with Mr. Silverstein, who hopes to break ground on a new 7 World Trade Center next spring, whether there’s demand or not. “I found him to be a very sincere fellow whose ideas for his site did not seem to me to be wild or different from the interests of others,” he said. “He and I both agree that the main part of this work has to be done in the private sector.”

Finally, the new chairman-who once said of himself, “I don’t consider myself a right-wing Republican, but pretty close”-said he would act quickly to defuse criticism that the board was acting merely as a proxy for Mr. Pataki, a Republican running for reelection. He likes to note, with a fatherly air, that while at the State Department, he swore in state economic-development czar Charles Gargano as ambassador to Trinidad and Tobago, and that he’s known Mr. Bloomberg for 30 years-ever since Goldman Sachs turned him down for a job. (Mr. Bloomberg, now a friend, jovially needles him about the decision, he said.)

In other words, Mr. Whitehead expects to call the shots-just as he always has.

“I think John is one who reaches out and listens to a wide range of thought and is very inclusive in getting to a view,” Mr. Corzine said. “Once he has a view, he is committed and persevering as anybody I’ve ever seen.”

Big Dreams

Mr. Whitehead arrived on Wall Street in 1947, after being discharged from the Navy. At Goldman Sach’s Pine Street offices, he was given a desk befitting his junior status, on a converted squash court. Mr. Weinberg had the next desk over.

The two rose in tandem, all the while brainstorming ideas for modernizing the fusty firm, hashed out over sandwiches at Scotty’s a nearby sandwich shop. When Gus Levy, the chairman of the firm, died unexpectedly in 1976, the two men finally got their chance. In a departure from tradition, they were named co-chairmen. “We did everything together,” Mr. Weinberg said.

Mr. Whitehead is credited with pushing Goldman into new foreign markets, and with enacting a written code of ethics. One rule in particular embodied his gentlemanly-some said old-fashioned-approach to business: Goldman would not fund the hostile corporate takeovers then coming into vogue. “Maybe it sacrificed some business for the firm temporarily,” Mr. Whitehead said. “But I believed that taking a stand on something like that improved our image and was good business in the long run.”

Mr. Whitehead became rich, and he pursued some of the favored diversions of wealthy men: giving money to Republicans and buying sports teams. With John McMullen, an old friend from his days growing up in Montclair, N.J., he bought a piece of the New Jersey Devils.

He retired from Goldman in 1984. But he was restless. “He had this feeling that if he’s not very, very busy, he feels worthless,” Mr. Weinberg said.

Washington Calls

Then he got a call one day from a man he knew only slightly, Secretary of State George Shultz. Mr. Shultz asked him if he could be in Washington the next day.

“I thought that either Argentina or Brazil must be about to go bankrupt,” Mr. Whitehead recalled. “When I got there the next morning, I walked into [Mr. Shultz’s] office, and he stood up and said, ‘We’re going over to the White House to see the President.’ And I thought to myself, ‘My God-it must be both Argentina and Brazil.'”

Instead, he was offered a job as Mr. Shultz’s top deputy. Mr. Whitehead went to Washington, where, according to a 1986 New York Times profile, he quickly “startled a number of aides by his preference for straight talk and crisp decisions.”

“I was not terribly good at the sort of be-nice-to-everybody approach to diplomacy,” Mr. Whitehead said. “I remember once suggesting that the Communist puppet government in Hungary should give up being part of the Warsaw Pact. That was treated with horror by a couple of the State Department people that were with my little party. But I think we should tell people what we think and what we stand for.”

Mr. Shultz recalled how, on one visit to Poland, Mr. Whitehead was told he couldn’t meet with Mr. Walesa because the Solidarity leader couldn’t get time off from his job at the Gdansk shipyard. “He said, ‘No problem-I’ll cancel my appointments, go over to Gdansk and see him,'” Mr. Shultz said. The Polish authorities quickly gave Mr. Walesa a few vacation days so he could travel to Warsaw.

Later, Mr. Whitehead would use his diplomatic skills to work for his friend, Mr. McMullen. Devils chief executive Lou Lamoriello recalled how the team tried for years to make Soviet hockey star Viacheslav Fetisov the first Russian to play in the National Hockey League. Mr. Whitehead lobbied Soviet officials, including Mikhail Gorbachev, to release Mr. Fetisov, now a member of the league’s Hall of Fame.

“We were able to do something that had never been heard of,” Mr. Lamoriello said.

By that time, Mr. Whitehead was out of government; he’d left the State Department at the end of Mr. Reagan’s second term. But once again, he found it hard to stay retired. He took a job as chairman of AEA Investors, a private equity fund. He accepted the prestigious chairmanship of the Federal Reserve Bank of New York. He raised money for numerous charitable causes, particularly the International Rescue Committee, which benefits political refugees. Last December, he traveled to-of all places-Afghanistan, where he and committee officials enjoyed a pleasant dinner with a rifle-toting group of Taliban leaders.

After Sept. 11, Mr. Whitehead was stuck in London, where he’d been attending a conference. He said he felt like a sailor who had missed his ship. But he would get his chance to serve soon enough.

Mr. McDonough, the New York Fed president, and Mr. Speyer, who serves on the bank’s board, dropped Mr. Whitehead’s name to Mr. Pataki. As the tasks facing the authority became evident-and as Mr. Giuliani made it clear he wasn’t interested in running it-Mr. Pataki decided that Mr. Whitehead would be his choice (a fact Mr. Whitehead says he learned by reading his name in an article in The Observer ).

So far, the selection of Mr. Whitehead has been met with uniform praise across the political spectrum. Then again, he hasn’t had to make any decisions yet.

His first will be picking an executive to handle day-to-day management of the authority. Several names are being talked about for the job, most prominently Rebecca Robertson, the former head of the Times Square redevelopment project.

Already, critics are surfacing and factions are taking shape. Democrats say the authority’s appointed board is too Republican. Civic groups complain that only one local representative, community-board chairwoman Madelyn Wils, was named.

On the issue of development, groups formed by the victims’ families have recently started to advocate against rebuilding on the site, while some developers are grousing that the board has no one to represent real-estate interests. “The two largest pieces of this puzzle are Larry Silverstein and John Zuccotti [the head of the company that owns the World Financial Center],” said Barry Gosin, chief executive of Newmark and Company Real Estate. “Where are they in this process?”

“Every citizen of New York has an interest in this,” Mr. Whitehead said.

Now all he has to do is get them to agree. Goldman’s Ex-Chief, John C. Whitehead, Is Downtown’s Czar