Goldman Sachs looks to pay bonuses amid PR nightmare

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CNBC's Charlie Gasparino reports that "Rival banks are eagerly awaiting this week's earnings announcement from Goldman Sachs (NYSE: GS) not only for the third-quarter results but for how the firm deals with up to $20 billion in bonuses just a year after it received federal bailout money during the height of the financial crisis."

With third quarter earnings expected to ring in at more than $2 billion, Goldman is prepared to pay out some hefty bonuses. The problem? Given that Goldman Sachs received a taxpayer bailout only a year ago, paying out massive cash bonuses now could lead to a significant public relations backlash.

Gasparino reports that Goldman may seek to assuage this concern by paying out a large chunk of its bonuses in the form of company stock rather than cash, thereby tying the value of compensation to the long-term health of the company.

That may make sense, but I have an idea for how Goldman can deal with the negative publicity: Ignore it. Goldman Sachs is not Wal-Mart (NYSE: WMT); it doesn't depend on the goodwill of millions of consumers in order to profit. Goldman doesn't have a strong retail operation, and generates profits mainly through trading, investment banking, and wealth management for uber-net worth families.

Sure: It's never fun when people are saying mean things about you. But Goldman Sachs' business model doesn't make its reputation among the masses important. As long as its cadre of clients still have faith in its ability to make them rich, Goldman can prosper.

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Last updated: February 09, 2010: 08:56 PM

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