Bloomberg News

Goldman Sachs Hosts Barney Frank at Fixed-Income Sales Event

January 23, 2012

(Updates with industry opposition to Volcker rule in the 7th paragraph, donations to Frank’s campaigns in 10th.)

Jan. 19 (Bloomberg) -- Barney Frank, co-author of the Dodd- Frank financial-reform law, was scheduled to speak today at a private event for Goldman Sachs Group Inc. clients in New York.

Frank, the Massachusetts Democrat who’s serving his last term after more than 30 years in Congress, was to talk about “Politics, Policy and the 2012 Election,” according to an agenda obtained by Bloomberg News. Michael DuVally, a Goldman Sachs spokesman, confirmed the agenda’s contents. He said the event, which is closed to the media and public, is sponsored by the fixed-income, currency and commodities sales department.

Robert M. Gates, who served as Defense Secretary under President Barack Obama and former President George W. Bush, was scheduled to speak later on “Security, Geopolitics and Perspectives from the Front Lines.” DuVally declined to discuss how or if the New York-based company compensated the speakers. Frank won’t be paid for his appearance, said his spokesman, Harry Gural.

Wall Street firms regularly invite speakers from business and politics to private events for money managers, affluent investors and corporate executives as they seek to improve relationships. Goldman Sachs’s connections to politicians and other government leaders have drawn accusations that the firm has undue influence, earning it the nickname “Government Sachs.”

The company hired Michael Paese, who was a top aide to Frank on the House Financial Services Committee, to help lead its lobbying effort in early 2009. Frank barred Paese from communicating with the then-Democratic majority on the committee as it drafted the financial-reform bill that affected Goldman Sachs, among other firms.

‘Nuts and Bolts’

Frank was to speak about his career, the current political landscape and the regulatory overhaul that bears his name, Gural said. The speech wasn’t to be about the “nuts and bolts” of the legislation, Gural said.

Goldman Sachs and other U.S. banks have opposed elements of the Dodd-Frank Act, including the so-called Volcker rule’s limits on proprietary trading, saying that the regulations will make it harder for investors to trade securities and put U.S. firms at a disadvantage to foreign rivals. U.S. regulators are still drafting a final version of the rule.

‘Capital Markets’

“We want to make sure that the market-making rules are not written in such a way that they make it so onerous for us and, not just us, but for all of the firms to continue our market- making function,” David A. Viniar, Goldman Sachs’s chief financial officer, told analysts on a conference call yesterday after the company released fourth-quarter results. “We just want to make sure that nothing prevents the free flow of capital and the growth of the U.S. capital markets.”

Goldman Sachs, which relies on trading for most of its revenue, reported that revenue and profit fell in 2011 to the lowest since 2008 as investment-banking fees and trading profits declined. The company also eliminated 2,400 jobs and cut compensation 21 percent.

The securities-and-investment industry donated the most money to Frank during his career, according to data on the website of the Center for Responsive Politics, which tracks political giving. Goldman Sachs isn’t listed among Frank’s top- 20 donors, which include New York-based JPMorgan Chase & Co. and Bank of America Corp., based in Charlotte, North Carolina.

“To the extent that bank profits on things other than lending go down, no, I think that’s a good thing,” Frank said in a June 2010 interview with Bloomberg Television about the effects of the legislation he championed. He added that lending had become too small a part of the financial industry.

William & Mary

Gates, who left the Defense Department last year, didn’t immediately respond to requests for comment made through his former spokesman, Geoff Morrell, and the press office of the College of William & Mary, where he’s scheduled to become chancellor.

Lloyd C. Blankfein, 57, Goldman Sachs’s chairman and chief executive officer, will introduce Gates at the conference, according to the agenda.

Others scheduled to speak include Lorenzo Bini Smaghi, a former executive board member of the European Central Bank, and Daniel Och, CEO of hedge fund firm Och-Ziff Capital Management Group LLC.

David Rubenstein, co-founder of Carlyle Group, was to speak on a panel with Och. Carlyle, a Washington-based private-equity firm, is planning to sell shares to the public.

--With assistance from Cristina Alesci in New York and Anthony Capaccio and Peter Cook in Washington. Editors: Peter Eichenbaum, Rick Green

To contact the reporters on this story: Christine Harper in New York at charper@bloomberg.net Phil Mattingly in Washington at pmattingly@bloomberg.net

To contact the editors responsible for this story: David Scheer at dscheer@bloomberg.net. Lawrence Roberts at lroberts13@bloomberg.net


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