About 13 months ago, Goldman Sachs Group (GS) was days away from failing, according to Vanity Fair. Now it's on track to pay out more bonus money than ever. But Goldman's CEO Lloyd Blankfein's feelings are hurt because some people are angry that his 29,400 employees will get record bonuses in 2009. So Blankfein is floating the idea of giving $1 billion to charity to make up for the shocking bonus pool this year, according to The New York Times.

Is there any reason for Americans to be troubled by Goldman's generosity to its employees? If you consider that 15.1 million Americans are unemployed now and that billions in taxpayer money kept Goldman from collapsing, you can see why Goldman would have a PR problem. Some might think that some of that government money ought to have gone to people with a greater need than wealthy Goldman bankers.

And the numbers are worth considering here. Overall, $12.9 billion of taxpayer money went to bail Goldman out of a bad CDS bet with American International Group (AIG), and Goldman is using $52 billion in cheap government financing to place its profitable bets. So that $23 billion in 2009 bonuses, as reported in the Times, could look pretty rich to many Americans. Perhaps Goldman should pay taxpayers back the $12.9 billion and stop using all that cheap government financing first.

How does Goldman defend the $23 billion in bonuses? It uses the Times to point out that only $225,000 is paid in cash with the rest going to stock that's deferred over four years with the possibility of clawbacks if bankers' bets go sour.

And then there's that old canard about preserving the franchise -- that's the idea that if Goldman doesn't pay enough, its best employees will go to the competition. This may have been a plausible argument three years ago, but with most financial institutions on life support, there are very few places where Goldman's best could jump for a bigger pay packet.

Goldman's giving $1 billion to charity would not make me feel better about its bonuses. I would be happy with a clear, detailed explanation of how Goldman is able to report such great profits in a year when everyone else seems to be suffering.

It would not surprise me in the least if its access to key decision-makers, leverage, and smart people gave it "better information" that it uses to make big, no-lose bets that no other trader can replicate. If so, why hide it from investors?

Peter Cohan is a management consultant, Babson professor and author of nine books, including Capital Rising (due in June 2010). Follow him on Twitter. He owns AIG shares and has no financial interest in Goldman securities.


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