Monday, April 13, 2009

Free at Last!

Hot off the presses, from the New York Times, Goldman Posts Profit and Will Raise $5 Billion:
Six months after accepting a financial lifeline from Washington, a newly profitable Goldman Sachs is pushing to return the billions of taxpayer dollars that it received in an effort to extricate itself from heightened government control.

Goldman, which rode out the final, tumultuous months of 2008 with the help of a federal rescue, reported strong quarterly profits on Monday and said that it would seek to raise money in the capital markets to repay the government.

If successful, Goldman would become the first major bank to return funds received under the Troubled Asset Relief Program, or TARP. Such a step would probably enable Goldman — long one of the most lucrative places to work on Wall Street — to free itself from government-imposed restrictions on compensation.
Of course, the Times article fails to mention the $12 billion recently transferred to Goldman Sachs as a payout on credit default swaps owed it by AIG, money originating in yet another government bailout. Goldman Sachs would not be required to return that amount.

Here's the same story from a somewhat less respectful viewpoint, by Heidi N. Moore, Goldman Sachs: Profits Up. Salaries Also Up. Take That, Treasury!
Goldman Sachs posted a $1.7 billion profit today — and with it, Goldman set aside $4.7 billion for salaries and bonuses. That $4.7 billion is 50% of Goldman’s revenues for the quarter, a jump up from the same time last year, when salary and bonuses accounted for 48% of Goldman’s revenues. In essence, things are still ugly in the market — but even so, Goldman actually said it would reserve more money for staff salaries in the first quarter than it did last year. Goldman doesn’t actually have to pay those dollars until the fourth quarter, but the expenses estimate how much Goldman expects to pay.

Goldman’s boost to compensation costs comes even as the firm employs fewer people, having cut its headcount by 7% since the end of last year. . .

On Friday, Deal Journal wrote about how other investment banks were not pleased that Goldman CEO Lloyd Blankfein called their bonuses excessive, “greedy and self-serving.” Some rivals didn’t believe that Goldman deserved the moral high ground, particularly given that Blankfein had made $68.5 million and was the highest-paid bank CEO at the height of the market.

Meanwhile, Goldman Sachs is trying to shut down a blog that's been sharply critical of their corporate culture and undue government involvement and influence. From Ars Technica:
Goldman Sachs has bigger things to worry about in this economy than a conspiracy theory-filled gripe site, but that's what it has focused its efforts on in an attempt to bully into shutting down. The investment bank has sent a cease and desist letter to Goldmansachs666 blogger Mike Morgan, claiming that his site has violated Goldman Sachs' intellectual property and trademarks, provides unfair competition, and could confuse consumers.

George Grosz: Eclipse of the Sun, 1926

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