The president of Goldman Sachs Group Incorporated, Lloyd Blankfein, is the front-runner to become the next chief executive officer of the world’s biggest securities firm by market value, two people with knowledge of the situation said .

Mr. Blankfein, 51, oversees Goldman’s fixed-income and equities trading unit, which generated 57% of the New York-based firm’s $25 billion of revenue last year, up from 36% in 1999. Henry Paulson, 60, the current CEO, was nominated yesterday by President Bush to replace John Snow as treasury secretary.

Mr. Blankfein, the son of a mail sorter for the U.S. Postal Service who joined Goldman 24 years ago as a metals salesman, became the second-highest paid executive on Wall Street after Goldman reported a second straight year of record profits. His ascendancy reflects the falling share of investment banking at Wall Street’s most profitable firm, shrinking to 15% of revenue from 33% six years earlier.

“Everyone knows it’s Lloyd, it’s just a formality,” said Glenn Schorr, an analyst at UBS AG, who has a “buy” rating on Goldman shares. “Out of every company I cover, Goldman Sachs has, hands down, the deepest bench and has proven to be very adept at having this cause the least disruption possible.”

Goldman has yet to appoint a successor. Mr. Paulson told employees yesterday in a memo that he probably will remain at Goldman until he is confirmed as treasury secretary. The firm’s board will pick the new CEO and make “any other appropriate management changes,” Mr. Paulson wrote.

Mr. Paulson is traveling to Chicago to meet with the firm’s senior executives, who are gathering for their annual partners meeting. He wasn’t immediately available for comment. Mr. Blankfein didn’t return calls.

New York-based analysts including Mr. Schorr, Michael Mayo of Prudential Equity Group, Merrill Lynch’s Guy Moszkowski, and David Hendler at CreditSights Incorporated tipped Mr. Blankfein to succeed Mr. Paulson.

“Blankfein has really been setting the tone of the place in the last three or four years, so Paulson moving on doesn’t really make a difference,” Mr. Hendler said. “They’re a hybrid investment bank, private equity firm, hedge fund. That’s the way they’ve been and that’s the way it will be if he leaves.”

Mr. Blankfein was paid $38 million last year, almost as much as Mr. Paulson and more than any Wall Street CEO, including Merrill Lynch’s Stanley O’Neal, who received $35.4 million in 2005, according to company reports.

Goldman paid employees an average $521,000 each last year as the firm earned more than either Merrill or Morgan Stanley, the no. 2 and no. 3 firms, with half as many employees. The firm is the no. 1 mergers adviser this year for a sixth year running and also is the top equity underwriter, according to data compiled by Bloomberg.

Shares of Goldman have risen 17% this year, making the firm the second-best performer on the 12-member Amex Broker/Dealer Index after Jefferies Group Incorporated. The shares fell $3.11, or 2%, to $149.83 in New York Stock Exchange composite trading.

As Goldman’s capital increased, so has its appetite for taking risk on behalf of clients and for its own books. Value at risk, a measure of how much the firm could lose in a day if the markets turned against it, climbed to $92 million in the first quarter from $28 million in 2000.

“People think very highly” of Mr. Blankfein, an analyst at Sanford C. Bernstein & Company, Brad Hintz, said. “Goldman has gone further than anyone else in re-embracing trading risk and you can’t argue with the results.”

Mr. Blankfein, a Democrat who at 5 feet, 8 inches tall is 5 inches shorter than Mr. Paulson, joined commodities trader J. Aron & Company as a gold salesman shortly after Goldman bought the firm in late 1981. The company has since been folded into Goldman’s fixed-income, currencies and commodities unit, known as FICC.

Mr. Blankfein became co-head of FICC in 1997, surviving the near-collapse a year later of the Long-Term Capital Management hedge fund that cost the jobs of peers at firms including Bear Stearns, Merrill, and Citigroup’s Salomon Smith Barney unit.

Goldman’s FICC revenue tumbled more than 30% in 1998, prompting Mr. Paulson to tell investors he wanted to reduce the firm’s dependence on trading.

“There was a confluence of events that were really hard to anticipate,” Mr. Blankfein said in an interview last year. “At Goldman, you just don’t blame the guy who walks out of a door and has a safe fall on his head.”

Mr. Blankfein became a vice chairman in charge of FICC and equities in 2002. The revenue generated by FICC led some Goldman insiders to joke about the “FICC-quitization” of the firm’s culture and its leadership. Joining Mr. Blankfein in Goldman’s upper echelon is Jon Winkelried, 46, former co-head of FICC with Mr.Blankfein and now co-head of investment banking.

FICC and equity trading are run by the quartet of Gary Cohn, 45, former head of energy trading; Michael Evans, 48, chairman of Goldman Sachs Asia; Thomas Montag, 49, who’s also co-president of Goldman Sachs Japan Limited, and Michael Sherwood, 40, co-CEO of the firm’s European division. All but Mr. Evans have fixed-income backgrounds.

Mr. Moszkowski said a bigger question than who succeeds Mr. Paulson is who’ll replace Mr. Blankfein. He considers Messrs. Cohn and Evans, and the chief financial officer, David Viniar, likely candidates and said Mr. Blankfein may want to have co-presidents.

Mr. Blankfein grew up in a public housing project in the East New York section of Brooklyn. He attended Harvard University, where he graduated in 1975 with a degree in social sciences. He paid his way with grants, loans and campus jobs, and received a law degree from Harvard Law School three years later. His first job was as a tax attorney.

He became Mr. Paulson’s deputy in December 2003, after then-president John Thornton departed and just before John Thain, who held the same title, left to head the New York Stock Exchange.

“Having Lloyd Blankfein as a clear popular no. 2 at Goldman will certainly put investors’ minds at ease,” said Jeffery Harte, an analyst at Sandler O’Neill & Partners in Chicago, who has a “hold” rating on Goldman shares. “The strength of Goldman Sachs isn’t so much the pilot as it is the airplane. Mr. Paulson has done a great job in managing things but the real credit probably lies beneath him in the people running the management lines.”

Mr. Blankfein had 1.89 million Goldman shares as of April, worth about $285 million, according to Bloomberg data. The firm reported in its February 27 proxy filing that he was planning to buy a $27 million apartment and facilities in a building part-owned by Goldman-managed real-estate funds.

The manner of Mr. Paulson’s move raised concern with Mr. Mayo of Prudential, who has an “overweight” rating on Goldman’s stock.

“The one negative is our ongoing concern about information risk at Goldman Sachs,” Mr. Mayo wrote, citing an interview with the Wall Street Journal on April 26 when Mr. Paulson said he planned to stay at the firm “for a good while.” “We feel that we have less handle on the inner workings of the company than the typical company that we cover,” Mr. Mayo wrote.