Is Goldman's Charitable Gesture Enough?
When Goldman Sachs said this week that it was starting a $500 million charitable project to help 10,000 small businesses — a sum that represents 3 percent of the $16 billion the firm has set aside so far for employee compensation this year — the announcement was widely seen as a public relations move. The firm’s chairman, Lloyd Blankfein, who had earlier stoked popular anger when he said Goldman was doing “God’s work” in its business, also apologized for participating in “things that were clearly wrong.” A recent audit found that the government bailout of A.I.G., the insurance company, resulted in billions of dollars of benefit to Goldman Sachs.
Does the firm have an obligation to make philanthropic efforts, given that it benefited from the federal support? How can the most be made of this opportunity? Should Goldman be committing more than $500 million, based on its bottom line?
Response by Robert Johnson:
The fact that Goldman Sachs is giving away $500 million to charity is certainly better than if it didn’t. Taken in isolation, it’s a good thing.
Goldman Sachs has benefited tremendously in this crisis –- both relative to other firms and in absolute terms. So let’s put that $500 million in perspective. According to the recently released SIGTARPaudit of the A.I.G. bailout, Goldman Sachs took in about $13 billion from that particular transfer of public resources. Maybe we could send over Michael Moore with his armored truck to collect the other 12½ billion dollars?But in the context of the way Goldman Sachs has made money on the backs of U.S. taxpayers, it doesn’t change the need to reduce the influence of that firm — or any firm in the financial sector — in running our political system and setting up the rules of our society.
Certainly we can appreciate that Lloyd Blankfein is making good on his declaration that he is “doing God’s work.” But Goldman Sachs would not have that $500 million of spiritual bounty to distribute if it weren’t for the U.S. taxpayers. Charitable giving is nice, but we can’t take our eye off the ball when it comes to the need to repair our structure of government and address the undue influence of Goldman Sachs and the other powerful financial sector firms. Such firms have had unbridled access to the public treasury and sucked up our resources to save themselves from a disaster of their own making.