As Goldman Sachs thrives, is an ethos fading?

Recently, Lloyd Blankfein hosted a reunion of one of the most elite clubs in American finance: former partners of Goldman Sachs, the Wall Street giant he has led, with controversial success, since 2006.

The gathering, held at the venerable New York Athletic Club, both celebrated Goldman’s past and looked toward its future. What, Blankfein was asked, did he want his legacy to be?

Blankfein replied that like his predecessors, he hoped to position Goldman Sachs to capitalize on whatever opportunities might arise during his tenure. As bland as that might sound, few on or off Wall Street have seized opportunities in these troubled economic times as skillfully as Blankfein.

But as President Barack Obama prods the financial industry to do more to help ordinary Americans — he chided “fat cat bankers” for increasing their pay — some current and former Goldman executives say Blankfein has built a money machine that, while it still values its customers, culture and reputation, puts profits above all.

Interviews with nearly 20 current and former Goldman partners paint a portrait of a bank driven by hard-charging traders like Blankfein who wager vast sums in world markets in hopes of quick profits. Discreet bankers who give advice to corporate clients and help them raise capital — once a major source of earnings for Goldman — have been eclipsed, these people said.

Blankfein has surrounded himself with a tight circle of executives drawn from Goldman’s trading operation. Many of these executives, like Blankfein, cut their teeth in the commodities division, J. Aron & Co. Gary Cohn, Goldman’s president, as well as the heads of the bank’s asset management division, are J. Aron alumni. So too is the head of human resources.

With the traders ascendant, Goldman’s bankers are being urged to generate bigger profits. In what former partners called a significant shift, Goldman now uses “profiles” to track how much money its bankers are bringing in.

Granted, money is what makes Wall Street run, and Goldman Sachs is no exception.

“I don’t buy the argument that the old Goldman was more principled and less greedy,” said Arthur Levitt, a Goldman adviser and ex-chairman of the Securities and Exchange Commission.

But even Goldman conceded it was changing with the times.

“This business is all about serving clients, and if you don’t evolve, you die,” said Lucas van Praag, a Goldman spokesman.

After first guiding Goldman through the near-collapse of the nation’s financial system and then deftly extricating his bank from a federal bailout, Blankfein is now presiding over one of the richest periods in the bank’s 140-year history. Blankfein has accelerated a decade-long decline of Goldman’s old partnership ethos, which was built around the principle that its bankers and traders can do well — indeed, very well — while putting their customers first, former partners said.

Some Goldman alumni are concerned that Blankfein is jeopardizing the culture of success that defined the bank for much of its modern history. They wonder if Goldman will become, as one former partner said, “just like every other bank on Wall Street” — focused on short-term profits rather than long-term gains.

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