The conflicts aren't the problem. The conflicts are the opportunity. As Senate Democrats craft a new bill forcing banks to look out for their clients' best interests, few inside Goldman Sachs Group Inc. would dare say such a thing—especially after Chief Executive Lloyd Blankfein vowed to examine how the world's most influential investment bank does business. WSJ's Dennis Berman talks about his latest The Game column, in which he argues that at Goldman Sachs, conflicts aren't the problem; they're the opportunity. He explains to colleague Evan Newmark. Mr. Blankfein doesn't need to look hard to find that conflicts have at times been at the center of Goldman's success. This isn't the stuff of the Abacus transaction facing fraud allegations from the SEC. This is the legal—and entirely client-approved—Goldman way, in which the bank crafts entire ecosystems for earning fees and returns. Take the firm's private-equity funds, to which Goldman bankers have brought deals, potentially at the expense of its own advisory clients. Similarly, in certain real-estate deals, the firm has been both lender and borrower at the same time. A Goldman spokeswoman declined to comment. Consider a Goldman $4 billion fund known as Whitehall Street Global Real Estate Limited Partnership 2007. Marketed to outside investors in late 2006, the fund was in a long line of real-estate ventures also backed by the bank and its employees. Whitehall's offering document shows Goldman at the height of its influence, as it brings nearly every part of the firm into the action of buying, structuring, funding, and selling real-estate deals across the globe. The bank and its employees would eventually own a third of the Whitehall fund. Outsiders would take the rest. Certainly other firms engage in similar activities. And Goldman's investors weren't dupes. The fund attracted a number of sophisticated investors, including some clients of Goldman's own wealth-management business. For outside investors, the pitch was to get aboard Goldman's powerful banking machine. "The Firm's existing global infrastructure, investment banking relationships and expertise should create unique acquisition and financing opportunities," says the 107-page offering document. Read More Complete Coverage: Goldman Sachs Case Eleven pages of the document explains how Goldman's interests might diverge from outsiders'. Some of the material is boilerplate. But a lot of it is not. Goldman's debt arm lends to the partnership; its investment bankers do its deals; and its asset-management arm collects monthly asset-management fees, disposition fees, and incentive fees. Throughout the documents, Goldman reminds investors, the bank may be trading for its own account the debt and equity of Whitehall investments. Goldman warns it may not even pursue certain transactions for fear of choking its own flexibility to trade. Late in 2008, Goldman had to restructure its debt after big losses, kicking off negotiations with its creditors, which included Goldman. Whitehall's equity investors worried that Whitehall might make concessions that would benefit a separate Goldman debt fund. Goldman has historically delivered such good results that most outside investors were happy to be a part of the action. Conflicts? Not a problem in themselves. As Mr. Blankfein told CNBC last week: It's "how you manage the conflicts that shows your quality and your character." Today the Whitehall fund is worth less than $800 million of its original $4 billion investment. Investors were enraged after they totaled up Goldman's Whitehall fees, which topped an estimated $200 million, according to documents reviewed by The Wall Street Journal. Goldman employees lost big sums, too. But Goldman employees got some relief from the firm, which cashed out—at a discount to net asset value—their interests in the Whitehall fund. The same offer wasn't made to outsiders. The bank was never required to—as it disclosed from the beginning. Goldman's spokeswoman declined to elaborate except to forward the text of a speech Mr. Blankfein delivered at Friday's annual meeting. In it, he said that the firm would review all of its business practices. Here's one investors are doubtless reviewing, too: Can a conflict be neutralized simply by disclosing it? Write to Dennis K. Berman at dennis.berman@wsj.com Copyright 2009 Dow Jones & Company, Inc. All Rights Reserved This copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com More In Deals

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