Goldman's Golden Ticket
Alter, Jonathan, Newsweek
Byline: Jonathan Alter
How the firm can find its way out of Toyotaland.
As you may have heard, NEWSWEEK is for sale, and we're looking for a few good billionaires (actually, one will do). For all the anti-Wall Street rhetoric, there are good billionaires floating around--public-spirited people trying to do something worthwhile with at least some of their money. They don't part with it easily, which is why they're rich in the first place. But for the purpose of this exercise, I'm going to spend some of their fortune (though it's partly ours, you'll see). To be more specific: I'm going to spend $1 billion of Goldman Sachs's cash, not on NEWSWEEK but on paying down the firm's debt to society. If nothing else, it may help us ask better questions about what money is for.
Call it social ransom--the price paid for getting straight with the public. Lloyd Blankfein, Goldman's chairman and CEO, became the predictable target of ridicule a few months ago for saying his firm was doing "God's work." But let's take him at face value. For centuries, many of those aspiring to such work have tithed, giving away at least 10 percent of their income. For Goldman, that would amount to about $7 billion a year. Were the firm merely to give away $1 billion (as Ted Turner did to the U.N. in 1997), less than 2 percent of its annual profits over five years, it would make a splash, perfume its reputation as it goes through the SEC's wringer, draw better recruits (smart applicants like social conscience), and begin to pay its debt to society. Lest you think this is totally unrealistic, at least one former Goldman chairman and one former board member have endorsed the idea--though, in the manner of the pinstriped, not yet in public.
Even if one believes Goldman is innocent of wrongdoing, its image is somewhere in Toyotaland. As I report in my new book, The Promise: President Obama, Year One, one day in the Oval Office last year, Obama said of Goldman: "Let me get this straight. They're now saying that they deserve big bonuses because they're making money again. But they're making money because they've got government guarantees." Austan Goolsbee, an economic aide, chimed in: "These guys want to be paid like rock stars when all they're doing is lip-syncing capitalism! They're the financial version of Milli Vanilli! …