Goldman Sachs CEO responds to 'Government Sachs' criticism

Trump fills top spots with Goldman Sachs employees
Trump fills top spots with Goldman Sachs employees

If Lloyd Blankfein gets his way, even more Goldman Sachs executives will join the upper echelons of the American government.

Rather than retreat from the "Government Sachs" criticism over the series of Goldman Sachs veterans who've joined President Trump's administration, Blankfein is doubling down on his Wall Street bank's tradition of public service.

"We will continue to encourage our people to contribute to government service if they are fortunate enough to be asked," Blankfein wrote in his annual shareholder letter published on Thursday.

The Goldman Sach (GS)s CEO denied that the presence of former employees inside the government allows the powerful firm to extract certain advantages.

"The opposite is true," Blankfein said. "Those in government bend over backward to avoid any perception of favoritism."

Blankfein applauded former Goldman Sachs president and his Number 2 Gary Cohn's decision to become Trump's top economic adviser. Cohn, who raised eyebrows by leaving Goldman Sachs with $285 million, is already playing an influential role selling the White House's efforts to rip up financial regulations that impact Wall Street firms like Goldman.

"Gary was not the first person from Goldman Sachs to join the government, and we hope and expect that he will not be the last," Blankfein said. "Five of my most recent predecessors went into government service, and that has not been by happenstance."

goldman sachs blankfein cohn
Goldman Sachs CEO Lloyd Blankfein (left) smiling with Gary Cohn, who stepped down as the firm's president and chief operating officer to become President Trump's top economic adviser.

Related: Wall Street has a powerful role at Trump's table

Even though Trump villainized Goldman Sachs -- and even Blankfein -- on the campaign trail and in a TV ad, the president tapped former Goldman partner Steven Mnuchin to be treasury secretary.

Not only that, but this week Trump nominated current Goldman managing director Jim Donovan to be Mnuchin's No. 2 at the Treasury Department. Also this week, former Goldman Sachs partner Dina Powell was reassigned to the more prominent role of deputy national security adviser for strategy, a senior administration official told CNN.

Trump's powerful chief strategist Steve Bannon too worked at Goldman Sachs in the 1980s as an M&A banker.

There's also SEC nominee Jay Clayton, a white-collar lawyer who has defended Goldman Sachs and whose wife works at the bank. Clayton's nomination hearing is scheduled for next week.

Critics charge that these hires create potential conflicts of interest and give Goldman Sachs too much power when it comes to shaping policy.

Senator Elizabeth Warren wrote Blankfein a letter last month asking just how much "influence" the bank has over Trump's economic agenda, especially financial deregulation.

"Dismantling Dodd-Frank would be a financial boon for large banks, including Goldman Sachs," Warren and fellow Democratic Senator Tammy Baldwin wrote. They noted Goldman's market value soared by $4 billion the day Trump signed an executive order to begin rolling Dodd-Frank.

Activists descended upon the Goldman Sachs headquarters in Lower Manhattan last month for a "Government Sachs" protest the bank's role in the administration.

Trump "said he was going to drain the swamp and all we see is that he's filling it more and more every week," Nelini Stamp, a 29-year-old protester, told CNBC.

Related: Trump hires yet another Goldman Sachs banker

But Blankfein defended Goldman's tradition of encouraging employees to join the public sector by noting that the firm recruits people who are "oriented to the larger world."

"In the process, they develop the skills to make a contribution in large, complex organizations and the expertise to help drive economic progress and job creation," he said.

Blankfein said Goldman Sachs isn't shy about voicing concern about controversial issues like the importance of marriage equality. More recently, the Goldman CEO spoke out against Trump's initial ban on travelers from seven Muslim-majority nations and warned it would cause a "disruption."

"When certain issues impact our people, we have not hesitated to speak up on their behalf," he said.

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