Goldman Sachs and the $100 million question

Welcome to the new economy: the middle class completely decomposes, while the banksters who received trillions (with a "T") in bailouts - well, let's not even call them bailouts anymore; it's just straight-up highway robbery - record record profits, and they call this the "recovery".

Times of London -


Chris Despopoulos, 54, and his wife Leslie, 51, protest outside Goldman Sachs headquarters in New York after the Wall Street bank reports record profits and bumper bonuses for staff

Goldman Sachs, the world’s richest investment bank, is facing a potential political storm over how much it pays its chief executive, Lloyd Blankfein.

Bankers in Davos for the World Economic Forum (WEF) told The Times they understood that Mr Blankfein and other top Goldman bankers outside Britain were set to receive some of the bank’s biggest-ever payouts, in defiance of President Obama’s attempt to shame banks into cutting bonuses. “This is Lloyd thumbing his nose at Obama,” said a banker at one of Goldman’s rivals.

Mr Blankfein took home his biggest bonus so far in 2007, when he was paid $67.9 million. Goldman’s profits last year were $1.8 billion higher than in 2007. This leaves the bank with a justification to pay him even more although payouts will be made in shares rather than cash to make them more politically palatable. Some rival bankers claim Mr Blankfein could receive up to $100 million, though even a much lower figure could prove politically explosive.

Lucas van Praag, Goldman’s spokesman, said:”Although the Board has yet to detemine executive compensation, given everything we have said and done on the subject, the idea that the directors would award Lloyd Blankfein $100 million, or anything close to it, beggars belief.”


Goldman Sachs’ London-based partners have agreed to limit their pay for last year to £1 million each in response to the British Government’s bonus tax.

Last week, the US President described bonuses paid out by some banks as “the height of irresponsibility” and “shameful”.

“The American people understand that we have a big hole to dig ourselves out of, but they do not like the idea that people are digging a bigger hole, even as they are being asked to fill it up,” he said last week.

Goldman will reveal the pay of its top five earners in a filing with America’s banking regulator the Securities and Exchange Commission by the end of next month.

The bank — sometimes referred to as a vampire squid — is disliked and envied by rivals in equal measure. It paid back the billions of dollars it borrowed from the Government under America’s state-funded financial assistance programme early, in part because it wanted to avoid political interference.

A bumper payout for Mr Blankfein would come after discussions by Goldman’s rivals in Europe to limit executive pay in order to appease politicians and the public failed last week. Joseph Ackermann, the chairman of Deutsche Bank, floated the idea of a remuneration cap at a private meeting of top bankers in Davos on Thursday, but failed to gain sufficient support. Last night it appeared that Deutsche had abandoned the plan and decided to pay some of its own top executives bonuses of millions of pounds.

The possibility of a bonus cap was discussed at a recent meeting between Alistair Darling, the Chancellor, and top executives from Morgan Stanley, JPMorgan, Standard Chartered, Citigroup and Barclays Capital. A banking source said it quickly became apparent at that meeting that a bank-led pay cap would be unenforceable because rival bankers would not stick to any agreement. “These guys have been rivals for years and they just don’t trust each other to do it,” said one source who was at the meeting.

Bankers and politicians, including Mr Darling, and US regulators also met on the sidelines of the Davos conference to discuss a global response to a bank tax proposed by Mr Obama and to regulatory issues such as plans to make sure banks have more capital, pay and bonuses.

Goldman originally declined to comment for this article which has been edited after it issued a statement.

• The singer Billy Bragg has reiterated calls for bonuses at RBS to be capped as he prepared to withhold his taxes in protest. The entertainer was supposed to pay his tax by midnight last night. He told crowds at Speaker’s Corner in Hyde Park: “Millions are already facing stark choices: are they willing to work longer hours for less money, or would they rather be unemployed? I don’t see why the bankers at RBS shouldn’t be asked the same.”