Important Social Purpose
by digby
Goldman CEO Lloyd Blankfein gave a long interview to the London Sunday Times and explained to the public why he and others like him are so talented and important. And he not so subtly indicated that unless we behave as proper serfs they might just need to punish us some more.
Throughout the interview he can barely contain his outrage about how unfair it all is that he and his fellow banksters are being criticized:
He understands that “people are pissed off, mad, and bent out of shape” at bankers’ actions. Goldman played its part in the meltdown that almost destroyed the global financial system. It, like most other banks, lent too much money, made its first quarterly loss for more than a decade last year and ended up taking bail-out cash from Washington. “I know I could slit my wrists and people would cheer,” he says. But then, he slowly begins to argue the case for modern banking. “We’re very important,” he says, abandoning self-flagellation. “We help companies to grow by helping them to raise capital. Companies that grow create wealth. This, in turn, allows people to have jobs that create more growth and more wealth. It’s a virtuous cycle.” To drive home his point, he makes a remarkably bold claim. “We have a social purpose.”
He says he doing God’s work. Seriously. That’s after he claims that he’s just a blue collar guy.
Read the whole article. Aside from his embarrassing, Randian fantasy that he’s a religious leader rather than a standard greedy plutocrat, his assertion that Goldman didn’t benefit from the government action and that their recent profits are the result of their superior strategy and stronger work ethic is delusional:
At the time of the collapse of Lehman Brothers, Goldman was forced to raise $10 billion of fresh capital by selling a 15 percent stake in itself to Warren Buffett and other investors. (At $123 per share, the sale was completed around 30 percent cheaper than today’s market price of $170 per share.)
Just days before the share sales — which directly allowed Goldman to stay afloat — the firm received around $12 billion in government aid. What is more, Blankfein was the only U.S. chief executive present at a September 2008 Federal Reserve meeting to discuss AIG’s (AIG) $44.6 billion loan.
Presumably, if Goldman Sachs had been able to privately raise the initial $12 billion provided to it by the U.S. government, it would have done so. What seems much more likely is that the investors — including Buffett — who later agreed to commit an additional $10 billion only did so on the basis that the firm was reasonably supported by government aid. That way, they could be assured that their money was not merely serving as a stopgap to bankruptcy.
This point is all the more prescient in light of the recent bankruptcy filing of CIT Group (CIT), a small business lender. The whole reason share sales were not a viable capital raising option for CIT was because the government denied the firm’s application for government aid earlier in the year.
No one wants to be left holding common stock when a company is headed for Chapter 11. While Goldman’s near-bankruptcy experience was shorter-lived than for most financial firms, it cannot be denied that it did indeed once face the very real possibility of having to drag itself through the courts. Lloyd Blankfein ought to be honest about that, if only to show that he is aware of the real possibilities of systematic risk.
I’m sure he’s aware of the real possibilities of systemic risk — he just doesn’t give a damn. Why should he? It certainly didn’t hurt him in the recent crisis. All he’s had to endure is some name-calling from Michael Moore — and he obviously feels even that is far worse than he deserves.
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