BlackRock's Latest Shot Over Goldman's Bow - TheStreet

BlackRock's Latest Shot Over Goldman's Bow

BlackRock has hired Ken Wilson, a former Goldman investment banker and ex-Treasury official who was a key behind-the-scenes player in the bailout of the U.S. financial system.
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BlackRock Inc.

(BLK) - Get Report

has hired a former

Goldman Sachs

(GS) - Get Report

investment banker and ex-Treasury official who was one of the key behind-the-scenes players in the bailout of the U.S. financial system.

Ken Wilson, 63, will join the trillion dollar-plus money manager as a Vice Chairman and member of the Office of the Chairman, BlackRock announced in a press release Friday.

Wilson made his career advising large financial institutions on deals, but a person close to BlackRock says it has no intention of getting into the investment banking business.

Still, BlackRock is anything but a traditional money manager. Its BlackRock Solutions unit, for example, helps institutions, including the U.S. government, evaluate investment portfolios that have grown too complex for them to understand. Though BlackRock is one of the most influential financial institutions in the world, it is not nearly as familiar to the public as Goldman or other large banks.

BlackRock CEO and Chairman Larry Fink was outspoken last year about his distaste for paying hefty fees to Wall Street banks to trade securities as they exploited the lack of competition brought about by the crisis, which swallowed up

Bear Stearns


Lehman Brothers


Merrill Lynch


A few months later, the

Financial Times


that BlackRock would put together a trading platform allowing it to get certain securities for clients for free so they wouldn't always have to go through dealer firms like Goldman,

JPMorgan Chase

(JPM) - Get Report


Morgan Stanley

(MS) - Get Report



(C) - Get Report

to execute trades. A BlackRock spokeswoman wrote in an email she had no updates on the initiative, which is connected with BlackRock's recently-closed acquisition of Barclays Global Investors.

On BlackRock's fourth-quarter conference call this week, CEO Fink also made a point of saying on at least two occasions that BlackRock does not do proprietary trading -- statements clearly aimed at distinguishing BlackRock from large banks in the minds of investors, as bank shares have been getting hammered lately on fears about new regulations.

What precisely Wilson will do at BlackRock is an interesting question. The press release announcing his hire says he will "work with professionals throughout the organization to support client relationships," and "work closely with the executive management team on a variety of organizational and professional development efforts." A BlackRock spokesman declined to elaborate.

Wilson's ties to financial services industry CEOs and high-level government officials certainly won't hurt. He left Goldman to join the Treasury in the thick of the crisis after receiving a personal phone call from President George W. Bush, according to "Too Big To Fail," a recent book by

The New York Times

' Andrew Ross Sorkin.

Among the many deals on Wilson's resume is

Bank of America

(BAC) - Get Report

's purchase of

Countrywide Financial

in 2008, according to

The Wall Street Journal


William Cohan, a writer and former investment banker, has a colorful profile of Wilson in his book, "The Last Tycoons," which is about the storied firm known today as


(LAZ) - Get Report

. Cohan thinks Wilson's closeness to Bank of America, which happens to be BlackRock's largest shareholder, is one of many reasons it may be useful for BlackRock to have Wilson around.

"We know he knows

Treasury Secretary Tim Geithner, I'm sure he knows

Fed Chairman Ben Bernanke, I'm sure he knows

Director of the White House's National Economic Council Larry Summers, even though he's a Republican, so there's that. He knows the financial services market, so any deal that Larry Fink wants to do, it makes sense to have Ken Wilson there for that," Cohan says.

Wilson also appears to have a strong professional respect for Fink. He was quoted in

The Wall Street Journal

last year as part of a profile of Fink saying "people talk to him because he is substantive," and "when I was at Treasury he would phone all the time and point out things we sometimes hadn't seen that were going on in the market."


Written by Dan Freed in New York


Read more on the emerging competition between

BlackRock and Goldman.