A good portion of the world hates Goldman Sachs
After making boatloads of money this year, and setting aside enough to be on track to pay employees the largest bonuses ever, CEO Lloyd Blankfein politely asked Goldman staff to stop living like modern-day pharaohs, reining in conspicuous consumption as the White House seeks to overhaul compensation.
"This is a sensitive time for us, and [Blankfein] wants to make sure that we're not being seen living high on the hog," said a Goldman executive.
This seems obvious. Almost a year after the $700 billion bailout know as TARP, Goldman can't take a breath without ridicule for its swift return to huge profits and huger bonuses. As author Michael Lewis writes, tongue-in-cheek:
Today, the sheer volume of irresponsible media commentary has forced us to reconsider our public-relations strategy. With every uptick in our share price it's grown clearer that we who are inside Goldman Sachs must open a dialogue with you who are not. Not for our benefit, but for yours.
America stands at a crossroads, and Goldman Sachs now owns both of them. In choosing which road to take, ordinary Americans must not be distracted by unproductive resentment toward the toll-takers.
Brilliant, and fair. There's no doubt Goldman holds a level of power and dominance that deserves to be poked at.
But two points here need to be addressed:
- For what it's worth, Goldman repaid every dime of TARP funds, with interest and a slug of warrants. A Goldman press release notes the TARP investment yielded an "an annualized return of 23 percent for U.S. taxpayers." Goldman is rolling in profits largely because it avoided the insane practices of the boom years, and its competitors are either extinct or on life support. If this were Citigroup
(NYSE:C), Bank of America (NYSE:BAC), or AIG (NYSE:AIG)-- still suckling away on taxpayers -- criticism would be much more deserving.
- Goldman's quarterly and annual reports clearly state the total amount spent on compensation along with the total number of employees, making it easy for anyone to figure out how much the average Goldmanite makes. These numbers are no secret. Hiding how employees blow their bonuses isn't the point; that they're making so much money to begin with is what causes the PR problem.
For related Foolishness: