Shut up, Lloyd Blankfein!
The Goldman Sachs CEO is trying to portray the Wall Street titan as a paragon of virtue. But Blankfein should stop pretending that the bank is a charity.
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| Goldman Sachs CEO Lloyd Blankfein won't generate much sympathy by apologizing about Goldman's role in the financial crisis and touting the company's growth as good for America. |
NEW YORK (CNNMoney.com) -- The public relations gurus who are advising Goldman Sachs Chief Executive Officer Lloyd Blankfein might want to give him some new advice. Shut up!
Blankfein made a startling confession Tuesday. He apologized for Goldman's role in the financial crisis, saying that the bank "participated in things that were clearly wrong and have reason to regret."
But it's tough to take Blankfein at his word. This mea culpa came a little more than a week after he made an embarrassing comment in an interview with the SundayTimes, saying that he was just "doing God's work." Interesting. I don't believe there are any references to credit default swaps in the Bible, Torah, Koran or any other religious text.
While Blankfein might have made the "God's work" comment in jest, it still goes to show that he needs to tread carefully if he really wants to prove to taxpayers that Goldman is not really the blood-sucking parasite that many are now making it out to be.
Goldman is facing a populist backlash because it was one of the original nine firms to receive bailout funds last fall. But it is now all of a sudden generating gigantic profits again and putting away large wads of cash for employees in its bonus pool.
Goldman has earned $8.4 billion in the first nine months of 2009. The company has already set aside $16.7 billion for compensation expenses, putting it on track to have a bonus pool of about $21 billion at year's end.
So it's no wonder that Blankfein has turned the spin cycle on over the past few months to try and send the message that Goldman Sachs (GS, Fortune 500) is the Wall Street equivalent of Google, i.e. it won't do evil.
On Tuesday, Goldman announced that it, along with investing legend Warren Buffett, is launching a $500 million program geared toward helping small businesses.
That's certainly admirable even though it's fair to cynically point out that Buffett's Berkshire Hathaway (BRKA, Fortune 500) investment firm is Goldman's largest shareholder. So I don't think I am going out on a limb to guess that the idea for this largesse probably had its roots in Omaha as opposed to the corner offices on Broad Street.
And if Blankfein is really sorry about the mistakes Goldman made, here's a thought: Instead of contributing a meager $500 million to help get small businesses back on track, maybe he could kick in $14 billion instead.
That's the amount of money Goldman received from AIG (AIG, Fortune 500) (courtesy of the U.S. taxpayer-funded bailout of the insurer) because of the so-called counterparty risk.
The small business program is Blankfein's latest attempt to try and prove that what's good for Goldman is good for America.
Last month, Blankfein told Fortune managing editor Andy Serwer that the company contributes to the nation's growth. "Once the economy starts to turn, we get very involved," he said.
Back in July, Goldman went out of its way to pat itself on the back for paying $1.1 billion to the government to redeem warrants that Uncle Sam got as part of last fall's $10 billion bailout of the firm.
Goldman deemed the payment "full and fair," and in a statement Blankfein gushed that Goldman was "pleased that this additional money can be used by the government to revitalize the economy, a priority in which we all have a common stake."
None of this is technically wrong. It's, of course, better for Goldman to be back in the black as opposed to bleeding red ink.
But has Blankfein blanked out and mistaken himself for former Goldman chief (and soon to be former governor of the Garden State) Jon Corzine? It almost sounds as if Lloyd is running for public office. What's next? Kissing babies and train rides all across America?
Blankfein shouldn't feel the need to constantly remind us of how Goldman is an important cog in the GDP growth machine and engage in excessive self-flagellation just because business is booming again.
It's actually an encouraging sign that banks like Goldman, JPMorgan Chase (JPM, Fortune 500), Wells Fargo (WFC, Fortune 500) and U.S. Bancorp (USB, Fortune 500) -- to name a few -- are this strong only a few months after many thought the financial system was doomed.
The notion that Goldman's good fortune is a problem is silly. Even though many average Americans are still struggling financially, it's misguided to suggest that everybody should be suffering and that the nation would have been better off if Wall Street went under. We shouldn't be demonizing success.
And let's not forget that Goldman has paid back taxpayers not just for the warrants but the full $10 billion in TARP money. There's a big difference between Goldman and Bank of America (BAC, Fortune 500) and Citigroup (C, Fortune 500), which still don't seem to be healthy enough to return bailout funds.
But Goldman Sachs is a bank. It's supposed to make money. It's supposed to take risks. Lloyd isn't exactly running the March of Dimes.
Blankfein is fighting a battle he can't win. He can't come out and bluntly state that his company's return to prosperity should be applauded because it proves that his firm's employees are more competent than Goldman's rivals. That's why he should just keep quiet.
The problem is that Blankfein is trying to dupe people into thinking that he's had his Ebenezer Scrooge moment and that Goldman is now more interested in serving the public than making a buck.
Apologizing for the credit bubble and claiming that Goldman has the best interests of the people at heart just makes Blankfein look foolish, not sympathetic.
Come on. We all know how Wall Street works. The fact that Goldman hotshots are set to make big bonuses this year isn't nearly as insulting as the fact that Blankfein wants us to believe that investment bankers and traders are really nothing more than highly compensated social workers.
Correction: An earlier version of this story erroneously cited the source of Blanfkein's "doing God's work" comments as being reported in the Financial Times instead of the Sunday Times.
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