Nov. 18, 2009 -- The Wall Street firm that has arguably taken the most heat for its multibillion-dollar employee compensation will donate $500 million for a new program to help small businesses.
Goldman Sachs, widely viewed as the biggest bank to suffer the least damage from the world's financial crisis, said Tuesday it will join forces with billionaire investor and Goldman stakeholder Warren Buffett on "10,000 Small Businesses."
The program will provide capital to small businesses in underserved areas and education aid to small business owners.
"Small businesses play a vital role in creating jobs and growth in America's economy," Goldman CEO Lloyd C. Blankfein said in a statement released Tuesday. "We are pleased to work with our partners in this initiative to support small business owners, particularly those in underserved communities."
Goldman Sachs, which received and later paid back $10 billion in federal Troubled Asset Relief Program funds during the financial crisis, has set aside $16.7 billion for employee compensation so far this year and is on track to pay out an average $700,000 per employee. The $500 million program amounts to less than 3 percent of Goldman's employee compensation pool.
There's been rampant speculation that the bank would announce an altruistic endeavor ahead of bonus decisions, although a statement said the plan has been in the works for a year.
Goldman generated headlines Tuesday not just because of the business plan but because of remarks made at a corporate conference by Blankfein. The CEO, who drew criticism earlier this month for saying Goldman was doing "God's work," Tuesday offered an apology for mistakes the bank made in the lead-up to the financial crisis.
"We participated in things that were clearly wrong and have reason to regret," Blankfein said during his remarks at the National Association of Corporate Directors in New York City, where he was honored as CEO of the year. "We apologize."
Goldman Doesn't Pacify Critics
Neither his apology nor the new small business program are doing much to pacify Goldman's critics, however.
"We need more than apologies and PR moves designed to repair their image," said Stephen Lerner, who directs the finance reform campaign of the Service Employees International Union.
Earlier this week, the SEIU staged a protest at Goldman Sachs' Washington, D.C., headquarters, arguing that the bank's multibillion-dollar bonus pool could be used to prevent foreclosures.
"Goldman and the other big banks need to change their overall business practices that have led to both the crash of the economy and enormous wealth being concentrated in the hands of fewer and fewer people," Lerner said. "A one-time pool to help small business doesn't deal with the real issue about why the American economy is stuck in neutral."