Row over whether Goldman Sachs needed bailout as execs press for bonuses
US Treasury secretary Timothy Geithner says Goldman Sachs could not have survived the financial meltdown without government help, adding Goldman and other Wall Street firms should show restraint in handing out bonuses this year. President Barack Obama has blamed compensation tied to excessive risk-taking for fuelling the deepest financial crisis since the Great Depression, and government will now oversee compensation packages at firms that have received the biggest bailouts. Goldman executives have played down the fact that taxpayers’ money helped it through the crisis, along with finance houses Morgan Stanley and JPMorgan Chase, who are all set to pay record combined bonuses this year. The American public (and Obama’s administration) are sick of greedy bankers and brokers, especially after companies such as Goldman set a Wall Street record in 2007, when its compensation totalled $20.2 billion, including $68.5 million for chairman and chief executive officer Lloyd Blankfein. Goldman, which is the fifth-largest US bank by assets, accepted some $13 billion from the Treasury and other forms of government support last year. It has since returned the funds with interest. But public anger goes even deeper than that. There are suspicions of potential conflicts of interest and favouritism after US insurance giant AIG paid the $13 billion to Goldman Sachs using money from its own $90 billion government bailout (The New York Times says AIG’s bailout was $182 billion – see why people are angry). Treasury secretary Henry Paulson had previously worked as chief executive at AIG. Read more: Bloomberg, Reuters, The New York Times
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