The Wall Street bonus season is fast approaching and so is the anxiety level among the financial industry's CEOs. Goldman's Lloyd Blankfein is in the biggest tizzy. Just a few days after telling a newspaper reporter he was doing "God's work" at Goldman Sachs by trading stocks and bonds and keeping the markets liquefied, he has now apologized for risk-taking that nearly tanked the firm last year. More than that, he has now confirmed a story I broke weeks back about how Goldman was planning a large charitable contribution as a way to make $20 billion in bonus money, earned mostly from the government guarantees that Goldman still feasts off of, seem a bit less obnoxious. Goldman is putting aside a whopping $500 million -- the largest such donation in company history -- to help small businesses
I wondered if it ever dawned on Blankfein or his partner in this charity binge Warren Buffett -- also a Goldman shareholder -- that this money may not be theirs to do as they please. Such a major donation like this one, I am told by one prominent Wall Street CEO, should have been approved by all shareholders, blessing from the Oracle of Omaha notwithstanding.
Buffett, of course, is a legendary leftie so I understand where he's coming from; Blankfein, less so, which makes me all the more suspicious. The firm will use the money to provide educational aid and funding for 10,000 small companies. These are among the hard hit victims of the banking crisis because they can't get loans and financing to expand and in many cases survive.
But that doesn't mean any of this is right. The last thing shareholders need is such overt do-gooderism. If Goldman isn't the evil empire some in the media proclaim it to be -- populating government with its former foot soldiers who then craft economic policy to advance the firm's agenda -- then there's no need to spend shareholder money, at least not so much of it, on charity. And what say did the rank and file shareholder have in such a major cash layout? None, which should spark plenty of debate among shareholder rights advocates even if their saintly Mr. Buffett is throwing his full support behind the measure.
All of which brings me back to Lloyd Blankfein, who has spent the past four months trying to figure out how he can justify accumulating an expected $20 million in bonus money that will be handed out to his flock of bankers and traders in the coming weeks. The bonus bonanza comes just a year after Goldman was ready to go under with the rest of the Wall Street risk-takers. And were it not for extraordinary measures to prop up entities like AIG, which insured Goldman's risky assets and designated Goldman a commercial bank (meaning it was protected by the Fed) on top of a $10 billion loan, Goldman would now be in Lehman Land.
Yet it survived because of the government (translation: The American Taxpayer), and now as it maintains many of those same perks, Goldman has become immensely profitable and is building a war chest of bonus money mirroring pre-financial crisis levels. It is an odd circumstance that the home of the free market -- Wall Street -- makes money feasting off of government protections, but that's what's going on across the financial business as bonus pools begin to swell with profits. Goldman just does it better than any of its peers. That's why you're hearing Blankfein making so many dopey statements of late -- everything from his ridiculous claim Goldman wasn't bailed out, that its exposure to AIG was minimal, to some of his recent whoppers, like he doing God's Work whenever he trades a stock or completes an investment banking deal.
I put his mea culpa and this charity thing in the same category. I don't need Blankfein to apologize for risk taking, I just want him to do it with house money, not the taxpayers', and rescind his firm's Too Big To Fail status and convert into a privately held hedge fund or something along those lines. Small businesses really don't need a handout from Blankfein and Buffett to survive and prosper so they can begin hiring people as unemployment approaches 10.5%; they need lower taxes and a better business environment from a president both men and many of their counterparts on Wall Street helped elect with huge donations of the non-charitable kind.
To be sure, Blankfein and Goldman are not as evil as their critics make them out to be. The firm wasn't at the center of the financial crisis; its risk taking was large but not as systemically evil and threatening to the health of the financial system as that of Citigroup, or Merrill Lynch, as I show in my book about the financial crisis, The Sellout. And yes, while the firm does have in place its partners in key decision-making government jobs (former treasury secretary Hank Paulson, the former Goldman CEO, was the man behind last year's bailout of the firm after he let Lehman fall into bankruptcy) I can make a case that other firms have just as much stroke in Washington. Why else would mega banks JP Morgan and Citigroup remain intact even as Obama economic adviser Paul Volcker calls for the reinstatement of the Glass-Steagall act, which would force both firms to break up? It's because the President listens more to JP Morgan CEO Jamie Dimon than just about anyone working at Goldman Sachs, or for that matter any of his own economic team.
But it takes more than being less bad (and less of a political animal) than your counterparts to be considered a good CEO. Somehow I just can't imagine former GE CEO Jack Welch twisting himself in knots trying to rationalize what CEOs are supposed to do, which is to make money. And what CEO would attempt to buy off public outrage about handing out billions in bonus money, if such outrage isn't justified in the first place?
For all these reasons I am recommending two things: Mr. Oracle should use his considerable clout to release taxpayers from their Goldman Sachs subsidy and make the firm a hedge fund or something different than a government protected "bank." Second, I think it's about time for Lloyd Blankfein to step down and resign as CEO of Goldman, and really start doing God's work by sparing the rest of us the stupidity of listening to his excuses.
Robert Reich: Breaking Up the Big Banks, and Why Congress Won't Do It
Two ideas are floating around Washington regarding how to handle 'too big to fail' banks, but only one is supported by the Treasury and the White House. Unfortunately, it's the wrong one.
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Fire Geithner and Summers
Impeach Obama.
Seize Goldman Sachs and the major banks
Re-direct their assets and the remaining TARP funds directly to the unemployed
to minority children needing first class educationa
Then we could pick some of Wall Street's most avaricious and have a national barbecue.
I wonder how much of that $500 million will find its way back into the friends and families of Goldman-Sa
koolaide stand
They are beginning to feel the heat and they're scrambling for a dark corner like all rats and roaches...
I have strong doubts about this. Mark my words, Goldman is not any healthier than it was before the bailout, and the individual
Please find the Ratigan GS video, it is brilliant.
your hope that a new CEO will not be so outrageous will not change public perception or public opinion regarding goldman ---- you say, they do what they do better than anyone else --i say what they did was unethical, bordering on criminal ---and i dont really care how much money they make ---it is tainted
so obscene in fact gasparini could not say it twice-----
you can forgive gasparini for saying twenty million
-twenty million is quit a huge sum of money and would represent reasonable expectatio
but the real sum is TWENTY BILLION which makes it that much more obscene
http://www
Charlie Gasparino can say anything he wants, but Goldman consistent
You guys in the media need to wake up and learn how to read a balance sheet.
It took you guys a while to figure out that GS was saved when AIG, the dysfunctio
When will you figure out that not only did GS leach $ from taxpayers, but did what was the equivalent of buying an insurance on a building and then setting fire to that very building.
Goldman Sachs = Warren Buffett = Goldman Sachs
Buffett is arguably the single largest individual beneficiar
And, do you think he wasn't involved in Goldman's decision to convert to a bank holding company last year in order to get access to EVEN MORE federal money and to have access to customer deposits as well?? Check out: http://www
I URGE you to do some digging into the antics of Warren Buffett through the years.
eg. 9/11 loan fund ... government subsidies ... environmen
I agree that they don't need the backstop now and should shirk the "bank holding" status, but that isn't going to call off the dogs that have blamed Goldman for the crisis, which we both know is far from the truth. I find it astounding that everyone complains about the AIG pass-thru for Goldman, but doesn't care at all about the same deals that were given to Societe General or Deutsche Bank, whose profits don't benefit the US government or the US taxpayer that backstoppe
The bottom line is that Goldman has only become such a public pariah because of their profitabil
From my perspectiv
No apology will suffice. No explanatio
No, I'm not just targeting Goldman ... nor is profitabil
Like the greedy individual who owned the goose that laid the golden eggs who thought that if he killed her, he would have all the eggs at once. Having killed her, he found that there were no eggs within. Having killed the United States and its people, where now are the Wall Street tycoons going to look for their bonuses? They have not yet realized where exactly they stand.
Rather than the "absolute value" of the money as a representa