Nov. 10 (Bloomberg) -- Goldman Sachs Group Inc. Chief Executive Officer Lloyd Blankfein said his bank, the nation’s fifth largest, is easier to manage than its bigger rivals, defending the company against regulators and lawmakers who want to break up the top U.S. lenders.

“Our business is very complex, and I won’t deny that, but it’s far, far simpler than most of the competitors,” Blankfein, 55, said today at a conference in New York sponsored by Bank of America Corp. “I wonder myself how some of these things get managed.”

Politicians and regulators are debating whether last year’s credit crisis and government bailouts showed that some finance companies had become so big that their failure would put the entire economy at risk. The Obama administration wants to boost the Federal Reserve’s ability to set stricter capital and liquidity standards to reduce that threat, while lawmakers including Senator Bernie Sanders, a Vermont Independent, have proposed limiting the size of banks.

Simon Johnson, a professor at the Massachusetts Institute of Technology in Cambridge, said in a Bloomberg radio interview today that Goldman Sachs’s assets nearly quadrupled over the last decade. “What have we gained from a societal perspective from Goldman Sachs becoming four times bigger? Nothing,” said Johnson, a former chief economist for the International Monetary Fund. “Break Goldman Sachs up into four pieces, let them choose how they break up.”

Investment Banking

Goldman Sachs, the most profitable securities firm in Wall Street history, has adhered to an investment-banking business model focused on advising, financing and investing even though it converted to a bank-holding company last year, Blankfein said.

“Most of the activities we do, and you can be confused if you read the pop press, serve a real purpose,” Blankfein said. “It wouldn’t be better for the world or the financial system” to change the firm’s activities, he said.

Goldman Sachs employed 31,700 at the end of September, compared with 281,863 at Bank of America, the largest U.S. bank, and 220,861 at JPMorgan Chase & Co., the second-largest.

“We pretty much stuck to our investment-banking knitting,” Blankfein said. “That’s why we have 30,000 people and many of our competitors have well over 200,000 or 300,000 people.”

Asset Rankings

Goldman Sachs had $882 billion in assets at the end of September, fewer than Bank of America, JPMorgan Chase, Citigroup Inc. and Wells Fargo & Co. Of the five banks, only JPMorgan and Goldman Sachs have returned money they received from the U.S. Treasury’s Troubled Asset Relief Program last year.

U.S. senators are debating whether restricting a bank’s size is necessary to make the financial system safer, or whether limits on borrowing as well as higher minimum capital requirements would be sufficient.

“The Treasury has got to tell us which institutions could bring systemic damage to the financial system and, within a year, break them up,” Sanders, the Vermont senator, said in an interview. “I know that sounds like a radical idea, but a century ago a good Republican named Theodore Roosevelt did the same thing. If it’s so big that it’s systemically risky, it’s too big to exist.”

Judd Gregg, a Republican Senator from New Hampshire, said that giving regulators the power to make banks smaller is “really dangerous.”

Size Advantage

“Big is not necessarily bad,” Gregg, a member of the Senate Banking Committee, said in an interview today. “If an entity is properly capitalized and if it does decent underwriting, big can work to the advantage of this country.”

Blankfein said that the New York-based firm’s change to a bank under the supervision of the Federal Reserve means that “there are dozens of people who work for the New York Fed who come to work in our offices every day” to provide a check on the company’s businesses. He said regulatory changes haven’t altered any of those activities, such as principal investing or commodity trading, that the firm engages in.

“We haven’t suffered from people saying, ‘Don’t do this,’” Blankfein said.

To contact the reporter on this story: Christine Harper in New York at charper@bloomberg.net.

Last Updated: November 10, 2009 15:02 EST