On The Call: Goldman Sachs CFO Harvey Schwartz

Like other banks, Goldman Sachs is under pressure to figure out new ways to make money amid increasing regulation and an uncertain economy. Goldman has been trimming jobs and expenses. On a call with analysts Tuesday, one analyst asked the chief financial officer how he knew he was right.

An excerpt follows:

CLSA ANALYST MIKE MAYO: "In terms of rightsizing the business, how do you know if you have downsized too much, you or your competition? Some are cutting a lot more than others. How do you know what is the right amount and when you have cut too much?"

GOLDMAN SACHS CFO HARVEY SCHWARTZ: "That is a great question, because if you look back over the past two years in some respects if you knew you were going to end up down 10 percent in headcount, you would have rather done that on day one, rather than take two years to do it. (Goldman has cut 3,400 jobs over the past two years, or about 10 percent of its workforce.)

"But really we don't have a crystal ball. And this is a really important strategic point about how we have to think about the business. First and foremost, we need to be there for our clients in all aspects of our business — investment banking, asset management, securities division.

"So we can't shape the opportunity set. We can only shape how we respond and compete with other market participants. So we are constantly reviewing it, and that is why you have seen us take the steps that you have seen us take. Right now for the current environment we feel quite comfortable. If the opportunity set expanded and the environment continued to improve, you could see us deploy more resources. And likewise if the environment was to trend downward I think you would see us respond there, too, of course."