Astute readers of this blog and another whose focus is business have commented that we should move on instead of continually writing about Goldman Sachs. We should not dwell on this crisis they have insisted. They believe that the country doesn't benefit from evoking the past and that anger doesn't have a place in this crisis. We need to simply get on with the business of fixing the problem. The problem, however, includes the past and without it a viable present is not possible. Goldman Sachs should not only be held accountable for their role in the crisis but they need to do something about it. They have benefited at the front end in fees and the back end in bailouts.
Last week, the Chairman and CEO of Goldman Sachs, Lloyd C. Blankfein, gave a half-ass apology for Goldman's significant role in the crisis by engaging in collateralized debt obligations (CDOs) and securing these bogus derivatives with AIG. The government bailed AIG out for $90 billion of which Goldman Sachs got $12.9 billion on top of the $10 billion received by the government. Blankfein said that his company "participated in things that were clearly wrong," but did not say what it did nor offer an acceptable solution to repair the damage. Americans are suffering.
Goldman Sachs seems blinded by greed and engulfed in a particular elitism that enabled it to not as Blankfein said to do "God's work" but to be the beneficiary of an unjust god who rewards executive failure with billions and makes the people bear it. Goldman Sachs recently announced a $500 million token to small business. (It set aside $16.7 billion this year for bonuses to those who brought on the crisis.) "The money will be welcomed by recipients, but if Goldman wants to make a meaningful contribution, it would have to be in the billions and aimed more directly at taxpayers," said the New York Times.
This unjust God allows Brian Griffiths, a Goldman Sachs international adviser, to make statements to excuse billions in bonuses by saying "We have to tolerate the inequality as a way to achieving greater prosperity and opportunity for all...'To whom much is given much is required,'"as if the aggregate of the people did not bailout Goldman Sachs for billions while they suffered. Without the billions in bailout, Goldman Sachs would be sacked.
18 comments:
"Astute readers and another"... Now that's a fun distinction! My primary concern apart from the situational ethics apparent in the GS executive comments is that we have learned nothing from the last several years. We get what we reward and, human nature being what it is, the actions of the majority of executives sharing in a $16B bonus pool are being richly rewarded. Why change?
Right on, David! But they will only change if we demand it! Yet, we keep doing the same thing over and over again expecting a different result. Of course, there is no vested interest for Wall Street to change when literally hundreds of billions, nearly 1 trillion, are giving for them to exist while the majority of Americans barely subsist. I'm all for clawbacks that will go towards reducing he deficit and enabling a healthier Main Street.
It is interesting to me when I hear Wall Street reporters speak about the need to compensate these financial wizards or they will leave their firm for another. So they leave! What possible detrimental impact could that have on anyone! They build nothing, provide questionable service and don't generally serve the greater good. Goodbye and good riddance!
Oh you poor "financial wizard"! What would you say if you sat next down next to the countless Americans who sit at their kitchen tables wondering how they can climb out of their hopelessness? Maybe just leave the keys to your BMW on that kitchen table! It's a start.
"They build nothing, provide questionable service and don't generally serve the greater good. Goodbye and good riddance!"
Amen!
That's funny, Kelly! I read that car repossessions had been at an all-time high. I don't know how it's looking now. We probably haven't even seen the hit to the commerical real estate market yet.
Reminds me of an old song I wrote (which could have been written to Wall Street): "Beat Me, Babe, I'll Be Your Pinata."
For sure, John! But I think it's high time for the people to beat back with real reform.
"Goldman Sachs should not only be held accountable for their role in the crisis but they need to do something about it. "
Did they break the law?
I don't know, I'm just asking.
If they did not break the law, they aren't acountable for anything. I agree we need reform, but it will probably go through Barney Frank and Chris Dodd -
Unlees of course they get voted out of office and are replaced by Republicans - and then there will be abosolutely no reform.
"Yet, we keep doing the same thing over and over again expecting a different result."
What I see are progessives acting in the same old way which will lead to a lot of outrage and we won't get reform, we will get the Republicans back in power.
Take a look at this.
http://latimesblogs.latimes.com/washington/2009/11/not-that-it-matters-politically-because-shes-a-republican-idiot-and-hes-a-democrat-geniusbut-sarah-palins-poll-numbers-are-c.html
Its not Fox news and they left out Obama's likability numbers (over 60% last I saw) - but Sarah isn't a joke. Unless you like dark humor.
Zorro - Your question of whether they broke the law is irrelevant when their practices were unethical. Blankfein has admitted to wrongdoing. Should we question that too? All Americans should be outraged by what is happening and and we should work for reform.
Zorro - When I say that Sarah Palin is a joke, it is most certainly not the "ha ha" kind. I think that she is as Martha Stewart said, "dangerous." The joke is that she knows nothing. Her Barbara Walters interview was awful. She simply does not know how to think. I can't imagine African Americans, Hispanics, Jews, women and intellectuals voting for her in large numbers. I also do not think that Independents will vote for her either. But if Americans do vote for Palin, they WELL deserve her.
Question: Why are we even talking about Palin when there are so many other pressing issues? In fact, it is the second day after her book release and I have not heard much about her today. It seems that her story really lasted for one full day since the book release. I think that leaders have to be pressured to do what's right. I'm less concerned about poll numbers. I also think that President Obama is less concerned about the same. Even during the campaign he was a steady hand. I think his focus is on doing what he thinks is best for the country. But there are, without doubt, others who are tasked to focus on the polls.
Personally, I think it is completely unrealistic to think that after inheriting such a disaster that things will turn around quickly. But I think that we have to insist on change no matter who's in office. As a former community organizer, President Obama understands this.
Here is Deepak Chopra on Palin.
Americans have this habit of biting off more than what they can chew and banks despite knowing the inability of the customers to repay continued lending.
I just don't understand why GS is blamed. Where is rationality in people? The entire sub prime crisis was caused by Americans themselves. If anyone is to be blamed it's the people themselves.
Aes Tos - Good to have you here. You have a point about the culpability of everyone. I watched first hand as Americans came into a real estate office and mortgage companies with water bills and telephone bills as proof that they had a job. However, this is essential to remember: If banks did not lend and the government was not a partner in backing their debt, which were then sold all around the world, Americans could not have purchased these homes. Without these banks and the government, the crisis could have been avoided. We even had GE and AIG acting as hedge funds. Hedge funds don't depend on the government for backing. Yet, the government backs Goldman Sachs and AIG which acted as hedge funds. I have to do some research to determine if GE financial entity got bailout funds through AIG.
During the height of the crisis the government allowed Goldman Sachs to become like a community banks with their FDIC protections even though it is an investment bank. This way they could receive billions for the people that they are not lending to. What's $500 million to $16.7 billion in bonuses for those who nearly bankrupted the global economy?
So, I repeat, if the government would not have secured the investments of Wall Street banks the people would not have been able to act. The really disgusting thing is that banks like Goldman sachs benfited in fees on the front end and now in billions on the back end while the people have not benefitted much at all. These banks are not even largely lending to small businesses. They have instead used TARP to buy smaller banks and become even bigger to fail. In a recent article, The Wall Street Journal agrees with the breaking up of these big banks. But who allowed it in the first place is my question?
Do pass through again.
Zorro, interesting piece by Chopra on Palin. "The shadow is always with us. Today it's on a book tour." He takes a shot at Glenn Beck but appeared on his show a few years ago and didn't mention politics.
Judith, if you haven't seen it, check out the latest BusinessWeek cover story on how Wall Street is bleeding municipal governments dry, especially Detroit. "The seeds of this looming disaster were sown during the credit boom, when Wall Street targeted cities big and small with risky financial products that promised to save them money or boost returns. Investment bankers sold exotic derivatives designed to help municipalities cut borrowing costs. Banks and insurance companies constructed complicated tax deals that allowed public utilities, transit authorities, and other nonprofit organizations to extract cash immediately from their long-term assets. Private equity firms, pointing to stellar historical gains, persuaded big public pension funds to plow billions of dollars into high-cost investments at the peak of the market. Many of the transactions shared a striking similarity: provisions that protected the banks from big losses and left the customers on the hook for huge payouts." One of the firms they single out is your favorite, Goldman Sachs.
http://www.businessweek.com/magazine/content/09_48/b4157034230199.htm?chan=magazine+channel_top+stories
Oh, John, I don't doubt this one bit! Thank you for the link. I had not read this story. I will check out the link and will undoubtedly have something to say about it. Thanks again.
To think that Goldmam Sachs received $29.9 BILLION from taxpayers whose city officials thought that Goldman was a reputable company working on their behalf is an OUTRAGE! Goldman's half-ass admission of wrongdoing with a token offer of $500 MILLION to small businesses while setting aside $16.7 BILLION for those who nearly brought the global market to a standstill is an OUTRAGE! I'm equally as ticked at Treasury for not looking after our best interest. Instead, they sided with Goldman in both administrations. Geithner, Bernanke should both go! Now! Summers too as the Presiden't adviser! He nearly depleted Harvard's scholarship endowement. Where is Volker?
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