Goldman Sachs chief: “I’m just a banker doing God’s work”

The chairman and CEO of Goldman Sachs, Lloyd Blankfein, claims he is doing “God’s work”.

In an interview with The Sunday Times yesterday he said:

“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. It’s a virtuous cycle.

“We have a social purpose.

“If the financial system goes down, our business is going down and, trust me, yours and everyone else’s is going down, too. The financial system led us into the crisis and it will lead us out.”

When asked about public anger at the $12 trillion the US Government has pumped into banks and the economy, only to see bankers making even more money, he added:

“Everybody should be, frankly, happy.”

Mr Blankfein’s attitude, and belief that banks have a “social purpose”, is in sharp contrast to the mood in the City, where Adair Turner, chair of the Financial Services Authority, described some financial activities as “socially useless”.

In his Mansion House speech in September he said:

“I do not apologise for being correctly quoted as saying that while the financial services industry performs many economically vital functions, and will continue to play a large and important role in London’s economy, some financial activities which proliferated over the last ten years were ‘socially useless’, and some parts of the system were swollen beyond their optimal size.”

http://twitter.com/shamikdas/status/5559362939 Shamik Das

RT @leftfootfwd: Goldman Sachs chief: “I’m just a banker doing God’s work”: http://is.gd/4QVeJ <— Extraordinary remarks!!
http://twitter.com/emma_campaigner/status/5559693202 Emma Harrison

what sort of god is claiming to work for? RT @leftfootfwd Goldman Sachs chief: “I’m just a banker doing God’s work”: http://is.gd/4QVeJ
http://www.leftfootforward.org/2009/11/politics-summary-wednesday-november-18th/ Politics Summary: Wednesday, November 18th | Left Foot Forward

[...] CEO Lloyd Blankfein is quoted as saying. He had earlier courted controversy by saying he was a “just a banker doing God’s work”. In addition to the apology, they have pledged $500 million over five years to help 10,000 US [...]
http://whyworktoday.spaces.live.com/blog/ Brendan Caffrey

Goldman Sachs and The Royal Bank of Scotland.

The American Security and Exchange Commission has recently charged Goldman Sachs of collaborating with a hedge fund called Paulson and Co.. Goldman Sachs (hereinafter GS) sold it’s clients a complex financial instrument called a “Collateralised Debt Obligation”; (hereinafter CDO). This CDO was structured by adding together sub-prime mortgages. These mortgages, for a variety of reasons, were very likely to fail. In which case those who bought the CDO were liable for any unpaid mortgages, or debts.

As Paulson knew that these CDOs were liable to fail, they bet on failure, correctly as it turned out; and made a fortune. The clients of GS included the Royal Bank of Scotland (hereinafter RBS) made great losses; and RBS had to be bailed out by the Treasury.

The moral issue here is why did GS not tell its’ clients what it knew from meetings with Paulson. Specifically, that the CDOs were designed to fail, and cost the purchasers; but make fortunes for Paulson? GS’s defence is that it lost money on their deal with Paulson; about $90 million, and received a fee of £15 million. This produced a net loss of £75 million? How significant a loss was this for GS?

The charge brought against GS has affected their share price, and their reputation. The chief executive had claimed that GS was doing “God’s work”. They now appear to have been acting against their clients’ interests.
Were the clients, including RBS, told that the CDOs were originated by Paulson? Were the clients told that the CDOs were based on sub-prime mortgages? It has been argued that other banks other than GS were behaving in the same way. This may allow a defence of normal business practice. This is a dangerous defence as it may bring legal charges against other banks. But that should not stop this case proceeding.

Please see my blog at: whyworktoday.spaces.live.com/blog/