It’s been a bad year to work at Goldman Sachs.
No bank draws the ire of American taxpayers like the Wall Street icon. They received over $12.9 billion when AIG was bailed out by the U.S. government.
And with expectations that Goldman will report $12 billion in earnings in 2009, critics are making accusations that these large profits were made by betting against mortgage bonds the investment bank put together.
Goldman Sachs initiated a voluntary-giving program two years ago that was open to the firm’s partners. Under that plan, Goldman’s top executives gave about $130 million to charity in 2008.
The proposed program would include more of the firm’s employees and set a mandatory floor for charitable giving.
Bear Stearns had a similar plan that set a floor of 4%. If Goldman went with that marker, the combined charitable donations would be just over $700 million.
As expected the proposed program has supporters and critics.
Top Wall Street recruiter Gary Goldstein says he has been hearing about the plan for some time now, and says the reaction from Goldman employees has been positive.
“Goldman’s reputation has been tarnished,” says Goldstein. “If it is something that can elevate the stature of the firm in the public eye, then I think people are all for it.”
Nonprofits, too, are likely to cheer the plan. Bradford Smith, president of the philanthropy-research firm Foundation Center, says Goldman’s move could help service organizations at a time when many are struggling to raise funds. “Ideally, you would hope rich people would voluntarily share their wealth,” says Smith. “But Goldman is leader in the corporate world, and if others follow, this could be a needed windfall for nonprofits.”
Critics say the charity plan is not likely to reverse the slide in Goldman’s public image. The problem, as they see it, is the amount of charitable donations will be a tiny percentage of the total bank bonus payouts. And that would be if every employee is forced to participate, which is not likely to be the case.
“This is window dressing,” says Brandon Rees, who is a deputy director in the office of investment at union AFL-CIO. “Unless they are required to give up 50% of their bonuses this is a meaningless exercise.”
