Goldman's call to arms: Bankers seeking gun permits ahead of bonus season
Dec 1st 2009 2:30PM
Updated Dec 2nd 2009 8:02PM
Goldman Sachs Group (GS) is at the focal point of the American public's rage against Wall Street -- and probably for good reason. The firm's former chief executives have populated the highest echelons of American government, which has turned around and given Goldman -- and its partner in the current financial collapse American International Group (AIG) -- billions of dollars in taxpayer money.
Now, as bonus season draws near, Bloomberg News reports that nervous Goldman Sachs partners are arming themselves. According to Bloomberg, some senior Goldman bankers are applying for gun permits ahead of the holidays for fear of the public's reaction once they start receiving their year-end rewards.
It's almost enough to make me feel sorry for these titans of finance. Goldman's bankers have already been denied holiday celebrations and the freedom to gather together in groups of more than 12. And, of course, they are also being denied a chance to flaunt their wealth.
It's not as though Goldman hasn't done anything to try to change the public's mood. Goldman recently announced a $500 million fund intended to help small businesses through a combination of training and lending programs. Yet, the announcement hasn't done much to soothe the public's anger -- an anger that I'm sure all of the hedge fund honchos that are set to out-earn Goldman's partners are relieved to see targeted elsewhere.
Once news of the final tally on Goldman's bonuses breaks, the bank is going to face an even tougher public relations campaign. Goldman's partners are expected to receive record bonuses this year. Some bankers fear a repeat of what happened in March to the AIG Financial Products employees who received $165 million in bonuses. Once word got out about the bonuses, demonstrators went to the employees' homes and protested on their front yards.
What Goldman execs need to remember is that the firm wouldn't be doing so well if it weren't for the public's munificence. After all, $12.9 billion of the AIG bailout money went to Goldman. And it is still enjoying $52 billion in low-interest loans from the U.S. government to finance its trading profits.
I am afraid the guns won't protect these Goldman partners. Perhaps a better weapon would be for Goldman to pay reparations for its role in securitizing sub-prime mortgages -- as I suggested last month, maybe it could deposit five years of bonuses in a fund to help people who have been displaced due to foreclosure.
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.