The board of Goldman Sachs on Friday elected Lloyd Blankfein, the firm's president and chief operating officer, to succeed Henry Paulson as chairman and chief executive.
Blankfein, 51, will assume both jobs, if Paulson, who was nominated on Tuesday by US President George W. Bush to be Treasury secretary, is confirmed by the Senate. Paulson will stay on until then.
The board was set to debate whether to split the jobs of chairman and chief executive, said two people close to the board, but chose instead to elect Blankfein to both roles.
Power has long been centralized on Wall Street, and most firms have combined the jobs of chairman and chief executive. Paulson has been both since 1999.
As chief executive, Blankfein would be free to appoint a president or co-presidents to fill the ranks beneath him and set up the next generation's race to the top.
The son of a postal worker who was born in the Bronx and raised in a housing project in Brooklyn, Blankfein has been the obvious successor at Goldman Sachs for several years and yet is something of an unusual choice.
His success is unquestioned: Under his watch, Goldman's trading business has boomed at a time when investment banking is less significant to the company's bottom line.
In 2002, the trading and principal investments division produced 52 percent of the firm's revenue, earning Blankfein US$12.7 million, more than his boss, Paulson, who made US$9.6 million.
But Blankfein does not appear to have, at least not yet, the statesman-like aura that has been associated in the past with Goldman's leaders.
While many welcome Blankfein's charm and humor, some express concern that he lacks the same savvy with corporate clients and politicians.
Paulson, a Dartmouth football player, environmentalist and investment banker, often helped bankers woo clients and win deals and vigorously called on clients around the world.
Certainly, tension between investment bankers and traders is common on Wall Street. Bankers consider themselves cultured ambassadors with a broad view of the world and a long-term view on client relationships.
Traders can measure their progress every day, in terms of the trades they win from their clients for the ideas they generate (or pass along) or the trades they make themselves. Their worth is evident on paper at the end of every day.
Since those who make the most money on the Street tend to have the upper hand, the traders have had the power for the last five years, creating an additional level of resentment.
Goldman Sachs, which has always had a strong trading arm, has built much of its reputation through the banking side of the business, advising on the world's top deals.
In recent years, as its trading revenues have contributed more to the bottom line, investment bankers are happy to see the income but reluctant to lose the seat of power.
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