Goldman Sachs Apologizes, Gives Back

Under Fire for Big Pay, Goldman Announces $500M Small Business Program, CEO Apologizes While Accepting 'CEO of the Year' Award

By ZUNAIRA ZAKI and ALICE GOMSTYN
ABC NEWS Business Unit
Nov. 18, 2009

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The Wall Street firm that has arguably taken the most heat for its multibillion-dollar employee compensation will donate $500 million for a new program to help small businesses.

Goldman Sachs, Buffett to help small businesses

A trader of Goldman Sachs works on the floor of the New York Stock Exchange in this file photo....

(Chip East/Reuters)

Goldman Sachs, widely viewed as the biggest bank to suffer the least damage from the world's financial crisis, said Tuesday it will join forces with billionaire investor and Goldman stakeholder Warren Buffett on "10,000 Small Businesses."

The program will provide capital to small businesses in underserved areas and education aid to small business owners.

"Small businesses play a vital role in creating jobs and growth in America's economy," Goldman CEO Lloyd C. Blankfein said in a statement released Tuesday. "We are pleased to work with our partners in this initiative to support small business owners, particularly those in underserved communities."

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Goldman Sachs, which received and later paid back $10 billion in federal Troubled Asset Relief Program funds during the financial crisis, has set aside $16.7 billion for employee compensation so far this year and is on track to pay out an average $700,000 per employee. The $500 million program amounts to less than 3 percent of Goldman's employee compensation pool.

There's been rampant speculation that the bank would announce an altruistic endeavor ahead of bonus decisions, although a statement said the plan has been in the works for a year.

Goldman generated headlines Tuesday not just because of the business plan but because of remarks made at a corporate conference by Blankfein. The CEO, who drew criticism earlier this month for saying Goldman was doing "God's work," Tuesday offered an apology for mistakes the bank made in the lead-up to the financial crisis.

"We participated in things that were clearly wrong and have reason to regret," Blankfein said during his remarks at the National Association of Corporate Directors in New York City, where he was honored as CEO of the year. "We apologize."

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Member Comments (34)

I wonder how many people responding to this story have ever done business with Goldman Sachs. I never have and never will. And hence I don't really care what they do or what they pay. If they are charging too much and have margins that are too high, their customers can always go somewhere else -- that is what is so great about free market competition. If their customers see value (quality per price paid) in the services they buy from Goldman, than more power to Goldman for running a good business. As to the comments about losing money in the market downturn, its probably worth remembering that putting money in the stock market used to be called what it is -- speculation. You have no one to blame but yourself for putting money you needed in the stock market. Maybe you will be more thoughtful about what you do with your hard earned money.
ladocsc 7:36 PM

Please - will someone explain to me how bonuses can be paid out to employees who have run a company like the banks, into the ground to the point that the federal government has had to bail them out? The American people have bailed them out since OUR tax dollars are what the government is using to bail all these banks out of trouble. The banks have the nerve to raise interest rates before the new legislation comes into effect, and various other things they are doing to consumers - please explain to me why THAT is being allowed. As far as I am concerned the government should have just let them go under. From the ashes arises a mighty oak.
DrKayMS 5:55 PM

I am continually amazed at how the leaders of the financial sector have no understanding of the real economy in the USA. The nation needs a strict take home pay of $750,000/yr for everyone, That means everyone earning a paycheck. Interest and dividends excluded. However, total pay is not restricted. the employee can earn any amount the corp deems to give, but the excess above $750,000 is put into an IRA in the corp stock until age 60. Let the CEO's learn to live on $750,000 or $1,500,000 if wife works. We need a return to basics where one earns a honest dollar.Skunk
HonestSkunk 4:33 PM