Goldman is "vampire squid wrapped around the face of humanity"

Shapecity · Nov 20, 2009

Nov. 18 (Bloomberg) -- So now we know the value Goldman Sachs Group Inc. places on salving its conscience for screwing up what Chief Executive Officer Lloyd Blankfein called “God’s work.” It seems that $500 million is all it takes to compensate the world for Goldman’s role in creating the credit crunch.

Goldman said yesterday it’s setting up a “10,000 Small Businesses Initiative.” It will shell out $200 million to educational institutions to help guide business owners, with a further $300 million invested for lending and philanthropy aimed at community development groups. Billionaire investor Warren Buffett, whose Berkshire Hathaway Inc. is the largest Goldman shareholder, is joining the initiative.

Here’s another way of looking at this sudden burst of supposed generosity. Goldman has $16.7 billion stashed in its bonus pot from the record profit earned in the first nine months of the year, which works out at $527,192 per staffer.

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.

False Gods

Even at the Stakhanovite work rates the firm legendarily squeezes out of its staff, that’s quite a stretch. The idea that one banker is worth 10 businesses is the kind of math that got us into this mess, with finance falsely elevated until it became an end in itself, rather than a means to providing services to the real economy.

The public isn’t likely to fall for this charade. The financial community has already spent too many years parading its charitable contributions to help divert attention from its risk-taking adventures. Tax-deductible gestures are no longer sufficient to comfort those who have seen their pension pots devastated by the credit crisis; even with this year’s rallies, the total value of the major global stock exchanges is still a bit less than $45 trillion, down from a peak of almost $62 trillion at the end of 2007, before the subprime meltdown wrecked the global economy.

Potentially more valuable than the charity fig-leaf is the apology Blankfein made yesterday. “We participated in things that were clearly wrong and have reason to regret,” Blankfein, 55, said at a conference in New York hosted by a magazine called Directorship. It would be nice to think that banking chiefs truly -- albeit very belatedly -- recognize that their reckless propagation of alchemical securities must never be repeated.

Fawning Adoration

Blankfein’s apology might ring truer, however, if he hadn’t been named CEO of the year by the magazine whose conference he was gracing with his presence. The fawning adoration for the multimillionaires who run the banking industry has only been diminished, not destroyed, by the damage their actions wrought.

If he worked for anyone other than Goldman Sachs, Blankfein would probably be out of a job by now. His remark earlier this month to the Sunday Times magazine that bankers are “doing God’s work” is the kind of indiscretion that loses you the key to the executive bathroom at most public companies.

No matter how many charitable donations it makes, Goldman will struggle to shake off the moniker bestowed on it by Matt Taibbi in Rolling Stone magazine earlier this year. Taibbi described the firm as “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.” Goldman and its peers need to practice humility and contriteness for an extended period, rather than seeking image-buffing headlines with token gestures.
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Source: Bloomberg

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Goldman is "vampire squid wrapped around the face of humanity"

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