The New York Times reports that Goldman Sachs (NYSE: GS) has offered "to lend money to more than 1,000 employees who have been squeezed by the financial crisis. The loans, offered via e-mail last week, could range from a few thousand dollars to hundreds of thousands."The irony here is just wonderful. A job with Goldman Sachs has historically been viewed as one of the very few surefire ways to get rich. Sure, you'll work a lot of late nights but the compensation can be pretty spectacular. In 2006, the average Goldman employee earned $622,000.
Of course none of this would matter if Goldman were a private company, but let's face it: It isn't. Not really. In addition to receiving TARP money, Goldman Sachs also received some $12.9 billion from the AIG bailout -- money that it would never have seen had that company been allowed to fail. So, given that Goldman Sachs owes an enormous debt of gratitude to the U.S. taxpayer, it's a little bit rich for the company to be offering loans to its employees.
In fairness, the loans are not being made to help pay for kids' last two years at Boston College or to make mortgage payments on that eighth home in Costa Rica. The loans are being offered to Goldman employees who invested in Goldman funds and are staring down steep losses that threaten their ability to meet their obligations (certain Goldman funds require investors to contribute more money from time to time).
Some Goldman employees were financing lavish lifestyles and investments with large amounts of leverage and are now finding themselves in a serious cash crunch -- a sort of microcosm for the broader problems facing the industry at large.
Given all that, Goldman may not really have a choice in making these loans: If the employees don't have the money to meet their obligations, what else can they do?
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Reader Comments (Page 1 of 1)
3-17-2009 @ 12:45PM
BHarrison said...
What about making loans to small businesses or to other homeowners, with good credit, to help boost the overall economy?
While the U.S. taxpayers are RISKING HUNDREDS of BILLIONS of dollars to bail out these corporations, Goldman Sachs is ONLY WILLING to make elaively safe and secure "loans" to employees?
The SAME shold beapplied to ALL corporations who are receiving "bail out" / Tarp monies. The "bail out" and TARP monies are a "two way street" . .. or at least they should be.
What is going on with all of this???
Why are we loaning (sic. "giving") Goldman Sachs BILLIONS of dollars to prop them up if they are not going to do their part to help pump up economic activity? It appears taht there is certainly a BIG DOUBLE STANADARD in the use of the HUNDREDS of BILLIONS of dollars that are being passed out.
If Golman Sachs doesn't 'step up to the plate" and start lending money, then the "bail out monies should be stopped, and repayment demanded.