How much good will can an apology — and half a billion dollars — buy? A lot, Goldman Sachs is hoping.
After first staunchly defending its outsize profits and pay, and then bristling at calls for restraint in these tough economic times, Goldman is trying a new tack: It is apologizing for past mistakes that led to the financial crisis — and sharing at least some of its riches.
A little more than a week after Goldman’s chairman and chief executive drew fire for saying the Wall Street giant was “doing God’s work,” the bank said Tuesday that it would spend $500 million — or about 3 percent of the $16.7 billion it has so far set aside to pay its employees this year — to help thousands of small businesses recover from the recession.
At the same time, the executive, Lloyd C. Blankfein, also showed a bit of humility, acknowledging at a conference in New York that Goldman had made mistakes, and that it was sorry. “We participated in things that were clearly wrong and have reason to regret,” he said. “We apologize.”
It was the clearest public statement of regret yet from Goldman, and a few hours later, as if to underscore that apology, the bank said that it was working with its largest shareholder, the billionaire investor Warren E. Buffett, to help 10,000 small businesses. The bank will offer them business and management education, mentoring and access to capital.
Across Wall Street, banks have regained their profitability — but not their public standing. With big banks minting money while many ordinary Americans are struggling, the financial industry has become the object of derision on “Saturday Night Live” and in the pages of Rolling Stone magazine, which branded Goldman “the great vampire squid wrapped around the face of humanity.”
Goldman insisted Tuesday that its new charitable initiative, the largest in its history, was not motivated by its current public relations headache.
The program, which Bloomberg News first reported a few hours before the announcement, will be guided by an advisory council led by Mr. Blankfein; Mr. Buffett; and Michael Porter, a professor at Harvard University, and also includes other big name backers like R. Glenn Hubbard, dean of Columbia Business School.
Goldman Sachs has bounced back spectacularly from the financial crisis and is planning to pay out billions of dollars in bonuses for the year. Goldman says it has to pay its employees well to retain top talent.
But while its fortunes have soared, its reputation has sunk.
The reputation problems of banks have thrust Wall Street’s public relations professionals to the forefront. The main securities industry trade group has taken steps to bolster its image by hiring Brunswick, a top public relations firm, whose partners include the former head of public affairs and the chief of staff to Henry M. Paulson Jr., the former Treasury secretary.
But Goldman’s image problems have been the most acute on Wall Street, and it has become a punching bag for an industry that is seen by many to have benefited unfairly from billions in taxpayer dollars. Goldman has tried a gamut of different strategies to fix its blemished image.
Mr. Blankfein has assumed a higher profile, giving speeches in which he has set out Goldman’s position on financial reform. In October, Goldman announced it was doubling the size of its charitable foundation, which focuses on education, by $200 million — a step that backfired when it was interpreted as a move to silence public criticism. Its effort to court the press by inviting journalists into its Manhattan headquarters to explain how exactly it makes its billions also fell apart when Mr. Blankfein made his remark about “doing God’s work,” and the public anger has not died down.
On Monday, 200 protesters marched to Goldman’s offices to protest its bonuses, according to Andrew Stern, president of the Service Employees International Union, who led the protesters.
He cautiously welcomed Goldman’s step on Tuesday.
“It’s a down payment, a step forward and hopefully a precursor of a different discussion — in the long run, how do we build an economy where everyone can share in the success?” he said. “But if this is an isolated public relations activity, it’s insufficient.”
Goldman said it had been working on the small-business project for nearly a year, and first considered committing the $500 million four months ago — long before its latest public relations woes. But, coincidence or not, the program usefully allies Goldman with Mr. Buffett, a man whose reputation as one of America’s wisest and most straightforward investors remains intact, and who rode to Goldman’s rescue last year in the darkest days of the financial crisis with billions of dollars of new investment.
In an interview, Mr. Buffett said he was approached by Goldman to take part in the effort “last month or so.” He said he was not committing any money of his own but would provide “advice from the 35,000-foot level.”
“I would not be doing this if I didn’t think there was going to be a significant net benefit to small-business owners in this country,” Mr. Buffett said, adding that he was not disturbed by Goldman’s image problems and defended its hefty profits. “They are making a lot of money now,” he said. “I am all for it and this program is a beneficiary.”
Under the plan, Goldman will provide $200 million to pay for small-business owners to get business and management education at local community colleges and other places — the first program will be at La Guardia Community College in Queens, New York.
The plan will also provide mentoring and networking services. Goldman said it had a long line of its own staff willing to take part.
And in a third prong of the program, Goldman is giving $300 million in loans and grants to small businesses. Some of the $500 million will come from $400 million in its foundation.
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$500 Million and Apology From Goldman
By GRAHAM BOWLEY
24 November 2009
How much good will can an apology — and half a billion dollars — buy? A lot, Goldman Sachs is hoping.
After first staunchly defending its outsize profits and pay, and then bristling at calls for restraint in these tough economic times, Goldman is trying a new tack: It is apologizing for past mistakes that led to the financial crisis — and sharing at least some of its riches.
A little more than a week after Goldman’s chairman and chief executive drew fire for saying the Wall Street giant was “doing God’s work,” the bank said Tuesday that it would spend $500 million — or about 3 percent of the $16.7 billion it has so far set aside to pay its employees this year — to help thousands of small businesses recover from the recession.
At the same time, the executive, Lloyd C. Blankfein, also showed a bit of humility, acknowledging at a conference in New York that Goldman had made mistakes, and that it was sorry. “We participated in things that were clearly wrong and have reason to regret,” he said. “We apologize.”
It was the clearest public statement of regret yet from Goldman, and a few hours later, as if to underscore that apology, the bank said that it was working with its largest shareholder, the billionaire investor Warren E. Buffett, to help 10,000 small businesses. The bank will offer them business and management education, mentoring and access to capital.
Across Wall Street, banks have regained their profitability — but not their public standing. With big banks minting money while many ordinary Americans are struggling, the financial industry has become the object of derision on “Saturday Night Live” and in the pages of Rolling Stone magazine, which branded Goldman “the great vampire squid wrapped around the face of humanity.”
Goldman insisted Tuesday that its new charitable initiative, the largest in its history, was not motivated by its current public relations headache.
The program, which Bloomberg News first reported a few hours before the announcement, will be guided by an advisory council led by Mr. Blankfein; Mr. Buffett; and Michael Porter, a professor at Harvard University, and also includes other big name backers like R. Glenn Hubbard, dean of Columbia Business School.
Goldman Sachs has bounced back spectacularly from the financial crisis and is planning to pay out billions of dollars in bonuses for the year. Goldman says it has to pay its employees well to retain top talent.
But while its fortunes have soared, its reputation has sunk.
The reputation problems of banks have thrust Wall Street’s public relations professionals to the forefront. The main securities industry trade group has taken steps to bolster its image by hiring Brunswick, a top public relations firm, whose partners include the former head of public affairs and the chief of staff to Henry M. Paulson Jr., the former Treasury secretary.
But Goldman’s image problems have been the most acute on Wall Street, and it has become a punching bag for an industry that is seen by many to have benefited unfairly from billions in taxpayer dollars. Goldman has tried a gamut of different strategies to fix its blemished image.
Mr. Blankfein has assumed a higher profile, giving speeches in which he has set out Goldman’s position on financial reform. In October, Goldman announced it was doubling the size of its charitable foundation, which focuses on education, by $200 million — a step that backfired when it was interpreted as a move to silence public criticism. Its effort to court the press by inviting journalists into its Manhattan headquarters to explain how exactly it makes its billions also fell apart when Mr. Blankfein made his remark about “doing God’s work,” and the public anger has not died down.
On Monday, 200 protesters marched to Goldman’s offices to protest its bonuses, according to Andrew Stern, president of the Service Employees International Union, who led the protesters.
He cautiously welcomed Goldman’s step on Tuesday.
“It’s a down payment, a step forward and hopefully a precursor of a different discussion — in the long run, how do we build an economy where everyone can share in the success?” he said. “But if this is an isolated public relations activity, it’s insufficient.”
Goldman said it had been working on the small-business project for nearly a year, and first considered committing the $500 million four months ago — long before its latest public relations woes. But, coincidence or not, the program usefully allies Goldman with Mr. Buffett, a man whose reputation as one of America’s wisest and most straightforward investors remains intact, and who rode to Goldman’s rescue last year in the darkest days of the financial crisis with billions of dollars of new investment.
In an interview, Mr. Buffett said he was approached by Goldman to take part in the effort “last month or so.” He said he was not committing any money of his own but would provide “advice from the 35,000-foot level.”
“I would not be doing this if I didn’t think there was going to be a significant net benefit to small-business owners in this country,” Mr. Buffett said, adding that he was not disturbed by Goldman’s image problems and defended its hefty profits. “They are making a lot of money now,” he said. “I am all for it and this program is a beneficiary.”
Under the plan, Goldman will provide $200 million to pay for small-business owners to get business and management education at local community colleges and other places — the first program will be at La Guardia Community College in Queens, New York.
The plan will also provide mentoring and networking services. Goldman said it had a long line of its own staff willing to take part.
And in a third prong of the program, Goldman is giving $300 million in loans and grants to small businesses. Some of the $500 million will come from $400 million in its foundation.
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