Business

Goldman’s rehab

Lloyd Blankfein is starting to worry about his legacy.

The 55-year-old chief executive of Goldman Sachs — three-plus years into his tenure — recently turned to a Texas corporate p.r. firm to buff the image of the tarnished Wall Street powerhouse.

Turning to outside consultants to gauge a firm’s “perception in the marketplace” is unusual for the 140-year-old firm. But that’s what you do, even if you are Masters of the Universe, when the national and international media accuse you of engineering and profiting from a back-door rescue of AIG, of using cash from a taxpayer bailout and cheap Federal Reserve financing to help finance lavish bonuses, and taking down the entire Greek economy.

Blankfein took the step of using the fancy p.r. firm, Public Strategies, sources say, because he feels Goldman has successfully weathered a storm of controversy — by trimming the overall compensation pool to 36 percent of revenue — and must now work to undo the damage.

Public Strategies, headed by Dan Bartlett, a confidant of George W. Bush and Karl Rove, is already on the case. Earlier this month, Goldman clients and Wall Street analysts starting filling out an exhaustive, online questionnaire seeking to pinpoint exactly what people thought of Blankfein’s firm.

One question wanted survey participants to compare Goldman to other Wall Street banks — and names rivals JPMorgan Chase, UBS, Bank of America, Citigroup and Barclays. Respondents were asked to fill in blanks from least favorable to most favorable.

“For the first 139 years it wasn’t that relevant to us to explain ourselves,” Blankfein told Fortune recently. “And now it became very relevant and the press did an important thing for us, they pointed out to us that that was a deficiency in our strategy, not to reveal ourselves . . . I’m just trying to take pains, which we should have done all along, to make sure that people understand what we do in the world.”

Sources point out that Goldman has used Public Strategies before, at least to consult on a specific, one-off deal basis.

The move to help re-burnish the image of Goldman may be tied to Blankfein’s roots in workaday New York. Born in The Bronx and raised in a Brooklyn public housing project, Blankfein, the son of a US Postal Service clerk, became one of the most powerful — and highly compensated — people in finance.

For most of its history, Goldman had a sterling reputation for excellence — a reputation that created a conduit to Washington and other places of power. Former Treasury Secretaries Robert Rubin and Henry Paulson, and New Jersey ex-Gov. Jon Corzine are just three in a string of Goldman employees that stretches back to the FDR administration.

Blankfein may be thinking he doesn’t want to be the CEO who left Goldman’s reputation in tatters.

But the storm may not be over. In recent weeks, Goldman has faced accusations that in 2001 it helped Greece engineer sophisticated securities deals — akin to those that destroyed energy outfit Enron — encouraging it to gorge on debt and inflate its budget deficit, and imperil the fragile Euro zone economy.

Meanwhile, for Blankfein, a former commodities trader who will celebrate 30 years at the firm next year, fixing Goldman’s reputation is now a top priority. But it may be the biggest challenge of his tenure, especially since the firm has little experience answering to average folk.

By way of contrition, Blankfein conceded to taking a relatively modest bonus of $9 million this year, compared to the nearly $68 million he accepted in 2007, despite having guided the firm through its most profitable year ever.

This “restraint,” as Goldman insiders referred to Blankfein’s taking a pay cut, came after the firm already decided to dial back its bonus pool to around $16.2 billion from what could have been as much as $23 billion.

Still, sources told The Post that some Goldman investors are starting to fret about the impact all the negative press could have on the firm’s future earnings.

“Performance is great but the headline risk is becoming a concern,” one source told The Post.

That criticism points directly to Goldman’s silver-tongued spokesman, Lucas Van Praag. has responded to criticism in a ham-fisted way, further ostracizing the firm.

Indeed, over the course of the crisis British-born Van Praag, who has an uncanny facility with the Queen’s English, has become the embodiment of the view of Goldman as an elitist institution.

One rival p.r. executive, who declined to be identified, put it this way: “They are playing to an internal audience of [Goldman] executives that think issuing two-page rebuttals to articles are beneficial, when it may make them look like a fool to outsiders.”

“[Goldman] lashes out when sometimes silence would be golden,” another source added.

That elitist feeling seems to rub Blankfein the wrong way — but Van Praag, a Goldman partner, by all accounts has the firm backing of the CEO.

At an early-morning breakfast at Goldman’s 85 Broad St. headquarters last Friday, Blankfein offered support for Van Praag and said he was upset that criticism of the firm had become “personalized” and directed at his p.r. guru.

mark.decambre@nypost.com