As reported in a New York Times Article Today Goldman Sachs is finding itself under fire for yet another massive bonus round for employees during the deepest financial crisis to hit the US and countries around the world in over 70 years.
According to the Times:
“For Goldman employees, it is almost as if the financial crisis never happened. Only months after paying back billions of taxpayer dollars, Goldman Sachs is on pace to pay annual bonuses that will rival the record payouts that it made in 2007, at the height of the bubble. In the last nine months, the bank set aside about $16.7 billion for compensation — on track to pay each of its 31,700 employees close to $700,000 this year. Top producers are expecting multimillion-dollar paydays.
The latest tally came Thursday, when Goldman reported another set of robust results. But its strong financial showing — a profit of $3.19 billion in the third quarter — was overshadowed by Goldman’s swelling bonus pool. Goldman set aside nearly half of its revenue to reward its employees, a common practice on Wall Street, even in this post-bailout era.
But despite Goldman’s success or, perhaps, because of it, the bank has come to symbolize for many a return to wanton Wall Street excess. Even in 2008, the most tumultuous year in modern Wall Street history, Goldman employees reaped rewards that most people can only dream about. Goldman paid out $4.82 billion in bonuses last year, awarding 953 employees at least $1 million each and 78 executives $5 million or more. The rewards for 2009 will be far greater.”
Interestingly, while there is mention of Goldman’s ability to “read the markets” and what appears to be its failure to read public opinion, no one is asking the deeper and more meaningful questions of how it is possible for the financial giant to continue to reap profits as other institutions, market sectors and indeed entire governents fail. No mention of Goldman’s “front running” software scandal which broke earlier this year… No mention of the claims coming from many financial analysts that Goldman is “gaming the system” at the expense of the entire economy…
Nor, for that matter, any mention of Goldman’s position as inside confidant to the Treasurey, and the relationships between its top executives and Treasury positions in recent times.
Seems Goldman is still a “Golden Boy” in spite of mounting evidence of unsavory and illegal financial practices - but these bonuses once again draw the attention to Goldman and at the same time away from the truly relevant and important issues of proper financial dealings by international financial institutions.
Too bad about that…
Perhaps the most telling comment in the article comes from Brian Foley, at the very end of the article, where it is clear that the issue is one of appearance:
“Brian Foley, a compensation consultant in White Plains, said of the possible reforms like delayed payments and clawback provisions: “I definitely think they ought to be doing it, and I assume they will be doing it. They have got to arrange the chairs on the deck so things look different.”
Think that last quote through a few times. There isn’t a much plainer statement out there.
Tags: Banks, Credit Bubble, executive bonuses, Financial Crisis, Goldman Sachs
