Goldman Sachs Boss: 'Bankers Do God's Work'
By Staff News & Analysis - November 10, 2009

Lloyd Blankfein (pictured left), the chairman and chief executive, of Goldman Sachs, has claimed that bankers do "God's work". Lloyd Blankfein, chairman and chief executive officer of Goldman Sachs, the son of a Brooklyn postal worker, believes that banks serve a "social purpose" and argues that the return of big profits and bonuses should be welcomed as proof the economy is recovering. Speaking to The Sunday Times, he argued: "We're very important. We help companies to grow by helping them to raise capital. Companies that grow create wealth. This, in turn, allows people to have jobs that create more growth and more wealth. We have a social purpose." While he says he understands people are angry at banker's actions, he continued: "Everybody should be happy. Companies are looking to grow again and raise money. That's where we come in. The financial system may have led us into the crisis but it will lead us out." Goldman Sachs is exempt from President Barack Obama's cap on bonuses because it paid back its £6 billion loan from the US government. As a result the average pay this year for the bank's UK staff will be around £440,000. Last month, Goldman Sachs said it had performed so well that its pay and bonus pot for the first nine months was up 46 per cent at £10.2 billion. It was reported that they were considering donating in excess of £627 million – Telegraph

Dominant Social Theme: And Goldman Sachs guards the pearly gates?

Free-Market Analysis: A further, and very strange, squeak of protest from another banker. (We have been cataloguing them, see article in yesterday's Bell.) There is no question that bankers are uncomfortable with what is going on. A PR blitz is apparently being organized (or what passes for one in the understated world of international banking).

The other day, top execs at the Bank of England blamed the merger of investment and commercial banks for the ongoing economic disaster. At about the same time, John Reed, formerly of Citigroup, apologized for building such a large and ubiquitous financial firm. And now Lloyd Blankfein has in some sense compared Goldman Sachs to God.

Banking is a fairly indefensible industry generally at this point in the 21st century. Bankers generally make too much money to complain, and they are not good at it. The problems come during times of economic difficulty – as have occurred recently. Then there is only so much that even a banker can take in terms of opprobrium and general bad press. A determination is made. And so do they – valiant men in good gray suits! – venture out onto the hustings and compare their enterprises to God's.

There really is no defending what Goldman Sachs does, which is to operate at the center of American mercantilism, greasing the wheels of its manifold and stupendously profitable enterprises by backing voluminous laws and burnishing government relationships. Goldman almost constantly seems to have one of its senior people at the forefront of the American Treasury, and in other high government places as well.

Is American enterprise ineffably better off because of Goldman's services? Goldman is an intermediary. It puts together buyers, sellers and partners in business dealings. Goldman's main profit comes when it benefits from one of the incredible booms that central banks seem to engineer at least once a decade, and for a good portion of each decade (present decade perhaps excluded).

Goldman's fees go up commensurately during these periods. It is therefore a main beneficiary of the ruin that central banking visits on much of the Western world on a regular basis. Its business becomes even more profitable when the economy heats up as a result of excessive fiat money printing. Subsequently its fees, including trading margins, go down during a bust. It is to Goldman's advantage to encourage the kind of central banking difficulties that the world currently suffers from because during better times Goldman's profits are huge.

Of course, we suffer inordinately during bad banking downturns, dear reader, as do you. The bills mount up and maybe the mortgage is threatened. But, we can assure you, we do not generate billions in profit as Goldman does when the economy overheats prior to yet another weary bust. Thus, we have limited reason to support Blankfein's sentiments.

Not only does Goldman profit a good deal from central banking practices, its top execs have also figured out how to exploit the government of the country for which they do numerous fundings and provide endless regulatory input. The air and train shuttles between New York and Washington are thick with Goldman functionaries.

Surely those at Goldman Sachs would protest that government work is a "service" that senior execs undertake to "give back" for all they have gotten from the United States. Perhaps before the War Between the States, this sort of rationale made some sense. The hard-working, successful businessperson went to Washington to do his civic duty. But, today, such a journey accomplishes no more than to further certain incestuous business relationships between America's larger industrial players and those who grind their nourishing legislative sausage.

This process is called mercantilism – when leading large enterprises use government relationships to shut out competition and gain competitive advantages that they otherwise would not be able to secure. The relationship that Goldman has managed to obtain with the United States government are so voluminous and seamless as to make it virtually a 51st state – with all the benefits accruing thereto.

Rarely if ever does one hear of a Goldman Sachs senior executive being charged with one of the thousands of infractions that can be leveled at Wall Street execs these days. Is this because Goldman Sachs execs are simply closer to God – or is it because the relationships are better (and thus executives better insulated)? And the profits that Goldman rakes in year-in and year-out have grown ever larger as Wall Street shrinks and Goldman's governmental position expands.

There is yet one more reason why we have a hard time believing that Goldman does God's work. This is because the Western world is incredibly overbanked thanks to central banks that tend to take care of their own during inevitable economic downturns. It is rare that a big bank goes out of business – though they do get merged. The result is that big banks get bigger and more powerful, controlling the lion's share of transactions and relationships in the good times and acting as virtual gatekeepers of what gets funded and what does not.

After Thoughts

Goldman Sachs exploits mercantilist relationships, supports the expansion of central banking and stands at the center of American commerce as a kind of financial gatekeeper, helping determine what worthy enterprises get funded and which ones don't. If Goldman Sachs' business was bereft of government relationship and advantages, if it had achieved its current position by competing fairly in the free-market we might be more inclined to agree with Blankfein's statement. But Goldman is a ruthless exploiter of government for private gain. In doing so it has distorted and continues to distort the tattered fabric of American free-enterprise. This is not God's work.

Share via
Copy link
Powered by Social Snap