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This is one of those actions that, in retrospect -- a retrospect no one could have anticipated, by the way -- looks like a problematic decision. Goldman Sachs (GS) is set to move into a gleaming, new office tower in Lower Manhattan, adjacent to the World Trade Center/Freedom Tower site.
The $2.3 billion steel-and-glass skyscraper was given a Liberty Bond tax break that allowed it to sell tax-free bonds to support the tower's construction. Liberty Bonds were created following the September 11, 2001 terrorist attack, as a way to help keep large-employer and finance-related companies in Lower Manhattan, Bloomberg News reported Monday.
Hence, as a result of the Liberty Bond program, Goldman's interest expense on the tower's financing is about $175 million less than it would be if the company had to opt for conventional corporate debt, Bloomberg News reported.
Fiscal/Economic Analysis: The Liberty Bond program represents a prudent and economy-enhancing move by the U.S. government: it has played a role in keeping a financial institution 'critical mass' in Lower Manhattan, and has helped the area recover faster than it would have, had no tax-exempt bond program been passed.
The problem is, in light of Goldman's reception of billions in bank bailout aid, then the bank's subsequent unwillingness to dramatically reduce banker bonuses and related compensation packages, the $175 million tax savings looks like another U.S. taxpayer subsidy of a financial institution that doesn't need it, and like a partial public subsidy of what many argue is excessive and unreasonable banker pay.
This is not to argue that Congress should pass a claw-back policy to recover the $175 million, but the circumstance does highlight how the view toward a public policy can change over time, based on subsequent events/actions.
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Reader Comments (Page 1 of 1)
12-21-2009 @ 9:39PM
hacker said...
ANOTHER great obama bail out, thank you for the handout to your buddies on wall street!
12-22-2009 @ 2:12AM
FEDUP said...
Tarp began under that asshole Bush! Obama is just an idiot who continued it.
12-22-2009 @ 2:17AM
THOMAS said...
This is Why The Tax Payers Who Bailed Out These Fat Cats And They Can Not Pay There Own Taxes, Goldman Sachs Earned $2.3 Billion Dollars In 2008 And Payed 14 Million In Taxes, They Are Related To The Tax Cheat Tim Geithner. Correction Election Sarah Palin 2010-2012.
12-22-2009 @ 8:17AM
Mike said...
The Dems and libs dug their own graves with their health care bill. It's a guarantee that the Conservatives will take back congress in 2010.
12-22-2009 @ 2:49PM
Allen said...
Lloyd Blankfein, CEO of Goldman, is an embezzler, thief, traitor and criminal who should spend the rest of his life in a maximum security prison. He should be joined by his co-conspirator, Henry Paulsen, the corrupt ex-Secretary of Treasury and former Goldman CEO, who stood to lose hundreds of millions of his own wealth if Goldman failed, as well as his puppet, Bennie Bernanke, also a Goldman employee. Goldman should be liquidated and any person who worked there should be permanently barred from securities trading, the harshest SEC penalty. It is time for the American people to retake their country from the 40 thieves of Wall Street!
12-22-2009 @ 3:34PM
Kevin said...
Geithner refuses to release Bush administration TARP documents - Geithner is the reason Obama is still refusing to release Bush-era docs about the massive govt bailout, says JW president Tom Fitton. “Their guy [Geithner] was involved in this last year, and now he’s running Treasury.”