Executives at Goldman, Sachs & Co. last month attempted to change a voluntary municipal industry ban on campaign contributions so several highranking company officials, including departing chairman Stephen Friedman, could contribute large sums of money to the campaigns of state and local officials covered by the restrictions.
A Goldman executive on Friday confirmed that Friedman, several members of Goldman's management committee, and a host of municipal market executives who live on Manhattan's Upper East Side, wanted to play a greater financial role in the U.S. congressional campaign of New York City councilman Charles Millard.
In September, executives at the firm began asking other municipal market players to change the voluntary ban so Friedman and his colleagues could make contributions in any amount to state and local officials, like Millard, who don't select bond underwriters. The accord caps contributions at $250.
The effort was unsuccessful with many of Goldman's municipal market competitors, who said they feared the negative publicity associated with such a move. The agreement was enacted in October 1993 following widespread reports that municipal bond houses had used campaign contributions to curry favor with politicians.
Millard, a Republican, is running against incumbent Democrat Carolyn Maloney for a congressional seat that covers the entire east side of Manhattan, and parts of Queens and Brooklyn.
Friedman and several other Goldman bankers live in the part of the area known as the "silk-stocking district." This area of Manhattan's Upper East Side is home to some of the wealthiest people in the country.
The Goldman official, who asked not to be quoted by name, said Friedman and the others wanted to support Millard because of Maloney's opposition to the North American Free Trade Agreement. The executive confirmed that Friedman made a $250 contribution to Millard's campaign.
Friedman and several Goldman officials had worked with the Clinton Administration in passing Nafta. The executives had also lobbied Maloney to vote for agreement's congressional approval.
"Friedman was one of the people at the firm who worked on Nafta, and he is one of the people who live in that district," the Goldman official said. "He wanted to contribute to Millard, but so did 10 to 15 others" at the firm, the official said.
The voluntary ban, enacted with the support of Securities and Exchange chairman Arthur Levitt, prevents municipal executives and their direct supervisors from making contributions of more than $250 to state and local officials.
The accord supplements a rule by the Municipal Securities Rulemaking Board, which took effect in April. The rule generally bars municipal dealers from doing business with issuers for a period of two years after making a contribution of greater than $250. Individual employees, however, are permitted to give up to $250 to political candidates in the jurisdictions where they live.
Like the MSRB's rule, the industry's voluntary ban caps campaign contributions to state and local officials at $250. But unlike the MSRB ban, the voluntary accord covers all state and local officials, not just those who help select municipal bond underwriters.
Neither Friedman, who has announced that he will step down at the end of November as Goldman's chairman, nor spokesmen for Goldman, Maloney, and Millard returned telephone calls requesting comment.
In addition, the Goldman executives said firm executives had sought the change to make additional contributions to Chuck Haytaian, the Republican speaker of the New Jersey State Assembly, who is running against incumbent U.S. Sen. Frank R. Lautenberg, a Democrat.
Goldman began its effort to change the accord in late September. Judah C. Sommer, vice president and manager of Goldman's government relation's department, sent a memo to executives at several Wall Street municipal houses.
The memo requested that executives at other firms join Goldman in attempting to change the voluntary ban to comport with the MSRB rule so the $250 limit only covers municipal officials that select bond underwriters, not all state local officials. Sommer would not comment for this article.
But Goldman's efforts to change the voluntary ban were a wash. After The Bond Buyer reported the effort, Goldman executives said they would not press the issue, saying most firms that joined the accord would not go along with the change fearing the negative publicity it would generate.
Top-ranking executives at several firms also said they chose not to join with Goldman because they felt uncomfortable about the firm's motives in amending the rule. Several of these executives said they knew Goldman had wanted to change the ban precisely so firm executives, including Friedman, could help finance Millard's campaign.