Lloyd Blankfein, the CEO of Goldman Sachs, has told a conference in Frankfurt that banks lost control of the exotic products they sold before the international banking. He repeated his earliercriticism of Wall Street compensation practices. He called the widespread anger over bankers’ pay “understandable and appropriate”.
Now before that sounds like humble pie, read Michael Lewis' comments on Bloomberg, satirising a fictional Goldman staffer's response to recent criticism:
"What small interest we maintain in the U.S. government is, we feel, in the public interest. Our current financial crisis has its roots in a single easily identifiable source: the envy others felt toward Goldman Sachs."
"The bozos at Merrill Lynch, the dimwits at Citigroup, the nimrods at Lehman Brothers, the louts at Bear Stearns, even that momentarily useful lunatic Joe Cassano at AIG -- all of these people took risks that no non-Goldman person should ever take, in a pathetic attempt to replicate Goldman’s financial returns."
"For too long we have allowed others to emulate us. Now we are working productively with Treasury Secretary Tim Geithner and the Congress to ensure that we alone are allowed to take the sort of risks that might destroy the financial system."
The fictional Goldbug continues discussing the risks inherent in bailouts
"The real risk, when you think about it even for a minute, is the risk we take ourselves: that Goldman will cease to exist and we will cease to be Goldman employees. To flirt with such tragedy we obviously need to be paid."
Clearly, Mr Blankfein felt he has run considerable personal risks because in 2007 he "needed" to be paid $70 million. Goldman has already earmarked $11.4bn for employee compensation from the first half of the year. On a full year basis that would be an average of $770,000 across its 29,400 employees.