Goldman Sachs's CEO says the firm got no special treatment during the bailout—and he intends to pay bonuses this year.
Rightly or wrongly, a business occasionally is picked out by the fates to serve as the "unacceptable face of capitalism"—a term coined by the late British Prime Minister Edward Heath. Goldman Sachs, for a lot of people, is today's UFC.
The kinder jokes refer to the legendary investment firm as "Government Sachs," because of its connections to former Treasury Secretary Hank Paulson (once a Goldman CEO) and other alumni who, as Washington officials, had hands in last year's financial crisis rescue operations. More rudely, a writer in Rolling Stone magazine likened Goldman to a "great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money."
Of the five major investment banks that walked the earth little over a year ago, only two survive—Goldman and Morgan Stanley. Lehman is dead; Bear Stearns and Merrill have been absorbed by commercial banks. Even in surviving, the cost in reputation for Goldman has been unmistakably if obscurely higher than for its fellow survivor, Morgan Stanley.
Sitting across from me now in his comfortable office on the 30th floor of company headquarters in lower Manhattan, Goldman's CEO Lloyd Blankfein professes to be more bemused than hurt by the slurs. I suppose his serenity may be helped by the fact that the events we're discussing—Goldman's brush with death—appear to be firmly in the past.
He defends all that he considers exemplary about the firm: its disciplined risk taking; that 90% of its revenue and profits are generated in service to clients; that it's not just a giant hedge fund, as some critics say; that it plays a vital social role in matching those who have capital with those who need it; that its partners frequently retire young to devote themselves to philanthropy or public service.
Yes, he acknowledges, the presence of so many former Goldmanites in top echelons of government gives some the impression of a firm pulling strings (he says it doesn't). "But," he says, "I bet when things have settled down, it will again be considered a positive for people to put their pursuit of personal wealth aside and go into government service."
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