As you probably know by now, last week Goldman Sachs announced its program to help small businesses. The bank said it will spend $500 million to help small businesses. The timing is very interesting. A little over a week before, Goldman’s CEO, Lloyd C. Blankfein said the bank was “doing God’s work.” Two days before Goldman Sachs made its announcement about the program, protestors gathered outside of the bank’s Washington office.
The protesters delivered a letter demanding the bank use its bonus money to help people. Andy Stern, SEIU president said to the approximately 200 protesters, “Today we call on Goldman Sachs to take all of the $23 billion we earned for them and put it aside in a pool for people…who lost their homes… And that $23 billion — if you can believe it — would save every single American next year from losing their home.”Goldman Sachs has earned skepticism and downright criticism for its program to help small businesses. A New York Times article pointed out that the $500 million is only three percent of the $16.7 billion Goldman Sachs has set aside to pay its employees. Bloomberg calculated that the $16.7 billion works out to $527,192 per employee.
“That means those 10,000 small businesses the securities firm says it wants to help are worth the equivalent of about 1,000 Goldman employees. Alternatively, a Goldmanite’s average contribution to society is pitched at the equivalent of 10 small enterprises, based on that bonus-versus-charity calculation.”
The $500 million is a fifth of the $2.3 billion the bank saved from the Federal Deposit Insurance Corporation (FDIC) guarantee to help banks, according to the Wall Street Journal.
National Public Radio offered the following suggestion to Goldman Sachs:
If Wall Street wants really to win back public respect, there is a more substantial gift it can make that does not involve money. Goldman Sachs and the other banking behemoths can take their foot off the Congress and free servile politicians to enact true financial reforms. Call off your lobbyists, let democracy function in behalf of the public interest, not yours.
A Harvard Business School blog post said that Goldman Sachs is viewed as having unfair advantages. The post said that the average profits of financial services organizations from 2000 to 2008 was 19 percent, while Goldman Sachs was 29 percent. The post said the “current year’s performance will undoubtedly widen the gap.”
Last week, Wall Street Journal’s Market Watch leveled sharp criticism at Goldman Sachs with its post about “five reasons why we want Goldman Sachs destroyed and buried so we can dance on its grave.” The post calls the AIG bailout out a “covert bailout of Goldman,” and said that the bank packaged and sold toxic derivatives to investors, “telling those investors that such derivatives were safe and smart bets.”
To Goldman Sachs credit it is the only CEO of a financial services organization to apologize for his company’s role in the economic crisis. Speaking at a forum for corporate board members, Blankfein said, “We’re a leader in our industry, and we participated in things that were clearly wrong, and we have reasons to regret and apologize for.” Whether apologies and $500 million are enough to salvage Goldman Sachs reputation seems dubious these days.