Just two months ago, it appeared that (now former) Goldman Sachs Chairman and CEO Lloyd Blankfein had cemented his legacy as one of the most effective, shrewd and savvy leaders in the investment bank's storied 150-year history.

That was before the indictments.

Since then, the DOJ has indicted two Goldman Sachs employees based in Southeast Asia - one of whom was a partner and top dealmaker at the firm - for their involvement in a scheme to defraud the people of Malaysia of $4.5 billion, the amount the DOJ alleges was siphoned out of 1MDB, a sovereign wealth fund that was seeded with some $6 billion in capital raised by Goldman in a series of bond offerings. Tim Leissner, the bank's former top dealmaker in Southeast Asia and the employee who helped bring in the deal, said in an affidavit that the bank's senior management was culpable for greenlighting the deal while ignoring concerns raised by the bank's compliance department - and alleged that it was indicative of a firm-wide "culture of corruption."

Shortly after Leissner's arrest, media reports revealed that a "mystery" senior Goldman executive who attended meetings with former Malaysian Prime Minister Najib Razak (currently in prison awaiting a trial on corruption charges) and corrupt financier Jho Low (who is currently a fugitive from justice after being indicted in the US and Malaysia as the alleged mastermind of the scheme) was none other than Blankfein himself. To help secure the deal, Blankfein even invited Low to the bank's 200 West Street headquarters for a private one-on-one sit down.

Previously, Blankfein had been credited with helping to rebuild the bank's reputation following a 2010 settlement over charges that it knowingly mislead investors who purchased subprime mortgage bonds during the run-up to the financial crisis. Now, that reputation is in jeopardy, threatened by 1MDB to a degree that wasn't present in the bank's other post-crisis legal contretemps.

In a sign of how perception about Blankfein's tenure is beginning to shift, Bloomberg reported that many of the bank's former partners are seriously concerned about the deal. During a recent meeting of Goldman alumni at a hotel in Lower Manhattan, the 1MDB scandal seemed to dominate the conversation. And many are placing the blame for the scandal squarely at the feet of the executive.

Many see 1MDB as "the biggest threat to Goldman's reputation" since the crisis.

It’s enough to shock the firm’s well-connected former partners, who gathered in a hotel near the bank’s Manhattan headquarters Wednesday night for their annual dinner. Though the group tends to pooh-pooh popular criticism, many veterans are disturbed that the firm allegedly ignored or missed red flags and are annoyed by the hit to its image, according to interviews with 10 former partners, including members of the powerful management committee. To them, it’s the biggest threat to Goldman’s reputation since the firm’s post-crisis...