Goldman Announces Record Profit and Bonuses. So Much for Financial Reform and an End to Greed on Wall Street

"Greed is Good," Gordon Gekko, Wall Street (1987)

Well, greed is not only good, apparently, it's back, and more ravenous than ever. On Tuesday the venerable Wall Street investment bank Goldman Sachs announced an astonishing $3.4-billion quarterly profit, it's best ever in its 140-year history. It also announced that it's allocated a whopping $11.4 billion towards employee compensation this year. So, just a few months after being bailed out by the U.S. Government and after much public and congressional excoriation over its high-risk trading and excessive compensation practices, this year's bonuses could match or beat the highest ever, while bringing Goldman back into the dicey mortgage and credit game.

"I find this disconcerting," said Lucian A. Bebchuk, a Harvard law professor, as quoted in Wednesday's NY Times. "My main concern is that it seems to be a return to some of the flawed short-term compensation structures that played an important role in the run-up to the financial crisis."

There are some very obvious questions here. How can Goldman turn around its fortunes so fast, going from government bailout to historic profit just two quarters later amid the worst economic crisis the nation has seen in 80 years? Where's the money coming from? After taking taxpayer money to survive, has Goldman returned to the same high-risk trading tactics that could strangle cash-flow should the markets turn further downward? What happened to all the regulation that was supposed to come with government intervention? How is the public to be assured that Wall Street's financial meltdown last Fall won't happen again, requiring even more taxpayer bailouts as the industry demonstrates an inability to tame it's voracious appetite for massive payouts derived from unsound banking practices?

Goldman received $10-billion last Fall in TARP bailout funds. How about this: next time they experience a cash crunch, rather than receive another government bailout, their employees return their bonus money? Why aren't we passing legislation to ensure that Goldman's highly paid execs, not the American taxpayer, foot the bill of the next bailout? Are we just gonna sit here and watch these greedy fat cats cut themselves massive bonus checks and then cut a check of our own next time they run out of cash? What have we learned from last fall's crisis? What steps are we taking to ensure that there's been true reform and that you, me and every other taxpayer won't have to clean up another colossal mess these reckless cowboys have created? Where does it all stop?

Gordon Gekko: "The point is, ladies and gentleman, that greed, for lack of a better word, is good. Greed is right, greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms; greed for life, for money, for love, knowledge has marked the upward surge of mankind."

To be sure, greed is alive and well on Wall Street.

Comments

[luccas]

Can we get a representative in Congress or the Senate to call for forensic accounting of firms receiving TARP money, dating back 7 to 10 years, in the least, and the following records made public:

a) loan book records, detail showing where profit left firm

b) cash distributions (total dividends extracted from balance sheet annually prior to claiming they were under capitalized, and since that time)

c) number of subsidiary firms receiving cash from bank balance sheet, that may be paid back later, as a loan –

d) record of funds routed offshore per quarter, and back into company accounts the next quarter where the financial firm might be claiming a profit from trading, but is simply routing funds back to their firm, which were parked offshore during the crisis. Rotations going back 10 years can measure increased activity in moving money offshore; outside of U.S. accounts.

e) executive payout and bonus payment records, for prior 10 years to see if firms ever paid out that much money in any year prior to 2008 or in past down economic cycles.

f) shareholder registry to cross reference with Fed Board of Governors and Secretary of Treasury officers or policy makers, to see if regulators approving actions of Treasury, or acting to write new regulatory law, are also shareholders of banks benefiting from 2008 pass through operations (via past or present to dividends/cash distributions)

[luccas]

.

http://freepdfhost.com/form_page.php?id=3205

Sample petition above. Print on legal size paper and fax.

[US1st2009]

thank you luccas. very well enumerated and stated!

[Mike Barden]

but i thought they didn't believe in evolution.

[ghudson68]

I'm not one to preach for more oversight in our 'capitalist' society. If this record profit can be explained as a positive result to our pump-priming, then it's great news and others should be catching up, too. If it doesn't pass the smell test, then it's really gonna reek throughout Wall Street. http://www.newsy.com/videos/as_good_as_goldman

[carlyt]

Doesn't seem right that Goldman can distribute that money before meeting its AIG obligations and maybe hiring back some of the 6000 people they laid off. There is a related post at http://iamsoannoyed.com/?page_id=588

[luccas]

(cont above)
Do you draw the line at debt evading practices, or do you draw the line at failure to contain "toxic assets?" Do you draw the line at requiring large firms to continue to pay out dividends during a crisis, or do you draw the line at a former Goldman Sachs CEO turning large banks into multiple, pass through operations? Do you draw the line at making changes in accounting or do you draw the line at pumping up share price so to sell the shares (called re-capitalizing), after making adjustments in accounting? Do you draw the line at pump and dump schemes like making changes in accounting so firms can rally on that change and sell shares to get more money, or do you draw the line at corrupt methods for acquiring capital, when no foreign nation will invest in your financial firms? Do you draw the line at improving your trade platform and paying the computer programmers a premium, or do you draw the line at giving the bill for that upgrade to the Treasury and American people, while keeping the secrets internally, as a "threat to national security?"

LoL America's buddy? Goldman Sachs a leader of the most corrupt people America has ever known. They are the worst amungst the NY elite. They serve no country. They have no honor. They love no nation. And they have no leadership skill. If they did, they would have been ..

(cont)

[luccas]

(cont from above)
...If they did, they would have been the first to stand up in defense of capitalism and capitalist rules of law; especially during an economic emergency. Good leadership does not abandon capitalist rule of law, just because an emergency arises. But GS executives were among the first to go silent about the rule of law, when it came time for them to unload their debt on people who did not sign for those debts. They have been silent about capitalism since that time.

Please do not make the mistake that these people are friendly to our national security.

Who else would call anything toxic an "asset," perhaps terrorists of the United States, or maybe the former CEO of GS, Henry Paulson, maybe a fed chairman who likes to keep 2 trillion in off balance sheet transactions? Same thing? Or maybe you will debate that too and suppose they are our friends and not enemies acting dishonorably to evade their debt obligations by pushing toxins on the rest of the country, confuse Americans and their Congressional representatives as they try to interpret the "toxic assets" GS, JPM and MS have been accumulating for "our benefit."

We are all in this together, right?
(Except when it comes to sharing in advanced automated trading platforms.)

(cont)

[luccas]

(cont from above)
We are all in this together, right?
(Except when it comes to sharing in advanced automated trading platforms.)

As for GS trading algorithms. Notice it is the only time in the last 18 months the FBI has done anything and they do it for GS. Not for the benefit of the American people. The FBI goes after this, but does not protect a single American citizen from the "toxic assets" which Goldman Sachs, JPMorgan and Morgan Stanley distributed like a poison fog of confusion into our economy.

The trading platform was corruptly had, and advantages of no competition, also, corruptly assured care of Henry Paulson, who made sure Lehman, Bear Sterns, Wachovia and WaMu, would NOT have the same fair chance to re-capitalize as many large NY based banks, WERE allowed to do. That was the main reason Paulson was there. To make sure competing firms got clocked on the head and then were destroyed or pulled aside. Their debts offloaded on the taxpayers, their more lucrative components divided by the favorite large banks of NY, while the Fed Board of Governors and Chairman pretend and insist, it was a time of crisis. A time to destroy capitalist rules of law, like all good friends of democracy.
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