Lloyd Blankfein, the CEO of Goldman Sachs (GS), has put an unusual spin on the bank's activities. He says his firm is doing "God's work." This may seem like an audacious statement coming from a man whose company has been harshly criticized for planning to give many of its employees multi-million pay packages just a bit more than a year after the collapse of the credit markets.
Blankfein told The Times of London, "We help companies to grow by helping them to raise capital. Companies that grow create wealth. This, in turn, allows people to have jobs that create more growth and more wealth. We have a social purpose." That is, of course, a social purpose that comes at a very steep price; it charges huge fees for raising money and handling M&A transactions, even if they eventually fail.
Goldman may be trying to publicize its role as a firm that finances the American economy and to hide its role in helping to create and market exotic money instruments like mortgage-backed securities. It wants the public to forget the money it made on the capital that the government gave it under the TARP program, and forget that it is not willing to reign in pay for even a year as a sort of penance for the financial community's and its own contributions to the collapse of the financial markets -- a collapse which has helped put millions of people out of jobs.
Goldman is in the enviable position of not owing the federal government any money, and it is not under the thumb of the Treasury Department's pay czar. The new Fed program to tie executive compensation to risk may simply be ignored by Goldman, or at least not taken very seriously when the firm sets pay.
Goldman has decided to take a risk that may end up paying off. Goldman is fabulously wealthy and seems to care nothing about public opinion; it is essentially thumbing its nose at the world because it can. The Treasury, the Fed, and Congress have more immediate problems than the paychecks of Goldman managers, and it may well stay that way.
Douglas A. McIntyre is an editor at 24/7 Wall St.