Last week’s big business news was the sky-rocketing success of banking giant Goldman Sachs, who defied expectations by recording second quarter profits of $3.4bn.
A whooping £6.65bn was immediately set aside for staff bonuses. You can imagine the bankers jumping for joy on their computer desks.
But it was only just over half a year ago that the famous, or rather infamous, bank went crawling to the US Treasury for a bailout to the tune of $10bn. So shouldn’t the taxpayer be the one getting these bonuses?
When banks are in trouble, they can simply stop lending and sell off debts to ruthless credit companies. Rich bankers can retire to their large homes, or simply move into safer jobs like accountancy. Often they will not even need to do this: instead the Government will bail them out because they are “too big to fail“. But when we get into debt, the bailiffs are on the doorstep
The general public have a right to be angry about this. Earlier this week, President Obama singled out Goldman Sachs when talking about the need for regulatory action to curb Wall Street recklessness. He said: “Now there are some companies, like Goldman Sachs, who have paid the money back and that means we don’t have the same kind of levers on them that we might have. And that’s why I think it’s important to pass this broader financial reform package.”
Goldman’s risk-taking culture doesn’t seem to have subsided with the financial crisis and subsequent bailout. Last week’s profits show their VAR (or value at risk) to have leapt from $184m to $245m. Hardly evidence of a bank who has seen the error of its ways and taken a more cautionary approach.
It’s easy to go over the top when assessing Goldman Sachs. Calling the bank a “great vampire squid wrapped around the face of humanity,” as Rolling Stone put it, might be going just a bit too far. Setting up a blog linking them to Satan, as Florida-based investment adviser Mike Morgan did with www.goldmansachs666.com, again, may be a bit of a stretch.
However, the misty-eyed wonder of James Quinn could perhaps be too far in the other direction. He rains praise on their “survival of the fittest” work ethic and the partnership culture that he says has led many previous members into the upper echelons of US politics.
Big deal – these guys may work hard, but is there any real risk when the state bail them out if they fail? And should we really be lauding praise upon them for the very connections that could have swung this bail out in their favour?
The Lehman Brothers didn’t have the same luck last year, and neither did the millions of people who lost their homes and jobs when the recession hit home.












