At Goldman, Blankfein Touches a Nerve With Powell's Return

(Bloomberg) -- Dina Powell’s departure from the White House offered Wall Street the chance to enlist a rare set of skills: an industry insider who can also navigate President Donald Trump’s inner circle. Lloyd Blankfein seized it.

The Goldman Sachs Group Inc. chief executive officer was the driving force behind the firm’s decision to rehire Powell and elevate her to the company’s powerful management committee, according to people with knowledge of the matter. It’s a bet her experience in government and philanthropy can help Goldman Sachs navigate the tumult of Trump’s presidency and win more business with some of the world’s largest investors.

As company spokesman Jake Siewert put it, “Dina had a terrific record in her decade at the firm, and we have no doubt that she’ll make a significant contribution when she returns.”

But the decision to create a new seat on the committee for an executive whose prior experience at Goldman Sachs centered on philanthropy and related initiatives has become a topic of debate inside its hyper-competitive headquarters in lower Manhattan. Before joining the White House last year, Powell’s projects included helping small businesses and charities. Adding that background to a board stocked mostly with profit producers serving elite global clients is frustrating some top executives, people close to the situation said, asking not to be identified describing private conversations.

No doubt, the consternation is exacerbated by the jostling of senior managers to join the committee themselves. Some Democrats among them also bristle over recruiting from Trump’s White House. And prejudices may be afoot in a male-dominated industry. The panel has 27 men and only four other women.

Warm Welcome

While the bank hasn’t publicly defined Powell’s new title outside of the committee, she will have more opportunities to generate revenue after she rejoins. One area she will focus on is building ties to sovereign entities. The group includes mammoth clients -- such as the Abu Dhabi Investment Authority or China Investment Corp. -- whose dealings can be lucrative and fraught. Powell declined to comment.

At a conference for trading clients at Goldman’s headquarters on Tuesday, Powell, 44, was warmly welcomed back by Katie Koch, a partner and asset management executive who cited her government service. Powell delivered remarks about foreign policy to the hundreds of assembled customers.

Blankfein, who announced Powell’s appointment last week in a staff memo that didn’t specify her start date, values her talent at forging and maintaining powerful relationships, one of the people said. A deputy national security adviser at the White House, she helped orchestrate the president’s trips abroad and was frequently in U.S. delegations at high-profile meetings with foreign leaders.

Before rejoining the bank, Powell spoke with several of the firm’s top leaders, who encouraged her to return, according to people with knowledge of the process.

Rise in Politics

Yet one reason her appointment has fueled some controversy is that only a few executives in the past decade have managed to join the bank and the management committee simultaneously. Mark Schwartz, who ran Goldman Sachs’s business in Asia, returned to the firm in 2012 and took a seat on the panel he had left more than a decade earlier. Karen Patton Seymour was hired in December as co-general counsel and took a seat typically held for the firm’s top legal official.

One executive said that some in the bank’s senior management wished they’d been consulted on Powell’s promotion before the decision was made. As is normal at Goldman Sachs, Blankfein made the decision without putting it to a vote of the management committee.

Typically, appointments to such panels reflect the vision of the CEO and the board, said Ana Duarte-McCarthy, who ran diversity efforts at Citigroup Inc. until 2016. It’s often based on “a mix of position and influence” she said. “Ms. Powell appears to bring both, and there’s some precedent for her appointment.”

A graduate of the University of Texas at Austin, Powell began her career as a legislative assistant in the state capitol. She later moved to Washington, where she worked for Dick Armey, then the Republican majority leader in the House of Representatives. She eventually joined George W. Bush’s White House and became personnel director and U.S. assistant secretary of state for educational and cultural affairs.

Powell joined Goldman Sachs in 2007, rising to partner, its highest rank, three years later. For a time, she ran the bank’s charitable activities and oversaw its 10,000 Women and 10,000 Small Businesses initiatives. When she left last year, Blankfein publicly praised her “outstanding service” at the company.

Atypical Mold

Her resume doesn’t fit the typical mold on the management committee, which is mostly composed of division heads, big revenue producers and members of the so-called federation -- risk, compliance and legal functions. Yet her past work in government and philanthropy is an asset to Goldman, which like many companies understands -- perhaps now more than ever -- that corporate engagement must be valued, both for branding and political influence, as well as recruitment, one executive at the bank said.

Powell’s role on the panel may also position her to inherit some duties from John Rogers, 61, the chief of staff whose expansive remit includes public, investor and government relations, if he were to eventually step down, according to one person.

She departed the White House in mid-January on good terms with Trump, people familiar with the matter have said. Her allies there included Trump’s daughter Ivanka and her husband Jared Kushner, who’s leading efforts to broker a deal to end the Israeli-Palestinian conflict. Another Goldman alum, Gary Cohn, announced this week that he too is leaving the White House, stepping down as Trump’s top economic adviser.

Read more: Wall Street is losing its White House allies

Powell was involved in the administration’s first National Security Strategy, released in December. Egyptian-born, she immigrated to the U.S. with her family as a child, and helped arrange meetings for Vice President Mike Pence in Egypt in late January.

That White House experience could help Goldman do more business with sovereign clients -- who will no doubt ask Powell to explain the unpredictable Trump.

©2018 Bloomberg L.P.

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