Backscratching, Fake Contrition At Goldman Sachs’ Boys Club
A double whammy of Goldman Sachs-related news this morning - not only have their chiefs given up their bonuses this year, but ex-Goldman execs in the White House are being investigated for conflicts of interest during the Wachovia/Wells Fargo merger. Gather round, children, and watch them squirm!
Around the time executive children start posting their Christmas lists to Santa, execs calculate how much more money to pay themselves that year, and don’t usually have to justify their decisions. But this year, now that major banks are all variously in debt to the American and British people, expect PR exercises for the next few weeks where the banks nobly and explicitly forego their usual obscene bonus-making.
The first such exercise has rolled out of Goldman, with this priceless bit of bull from their spokesman: “Our senior executive officers made this decision because they believe it is the right thing to do. We cannot ignore the fact that we are part of an industry that is directly associated with the ongoing economic problems”. No, it’s because if they did give themselves bonuses, Americans with flaming torches and pitchforks would have descended on Goldman branches nationwide. Presumably the flak from announcing a $7bn bonus package a couple of weeks back has brought on this attack of conscience.
While the current execs are feeling the impact of the crisis, Goldman’s previous bonus-munchers are also facing scrutiny in their new home, the US Treasury. Senator Chuck Grassley asked Eric Thorsen, the inspector-general of the Treasury, to investigate the “independence” of former Goldman employees who work in the Treasury with Hank Paulson, who was formerly head of the bank.
Grassley is accusing Paulson and friends of monumental mutual back-scratching, by changing a tax code that put Wells Fargo in a financially stronger position than Citigroup to buy Wachovia, which it then duly did. And who’s the chief executive at Wachovia? Robert Steel, who used to work for Paulson in the Treasury.
While this all might turn out to be innocent enough and just the inevitable outcome of filling the Treasury with ex-bankers, it serves to show the level of distrust of Wall Street from the Senate itself. Surely Obama, eager to promote his “change” manifesto, is going to turn to financial brains rather than poaching from Wall Street. Otherwise he could face howls of indignation not just from the American people, but from his own Senate.
