It's tempting to feel bitter, isn't it? Many of us are sucking wind on account of the recession, with the awful sensation that things are going to get worse, not better. And here comes Goldman Sachs, the royalty of Wall Street, racking up a huge $3.4 billion quarterly profit and making plans to pay bonuses that could average well over half a million dollars per employee.
Goldman, of course, is accomplishing this with the help of a $10 billion TARP loan from the government, which it paid back in June. The tony banking firm has benefited even more from the bottomless AIG bailout, which allowed Goldman to recoup $13 billion from the insolvent insurer without losing a penny. It has also taken advantage of FDIC backing for privately issued bank debt, borrowing $28 billion at much cheaper rates than it would have had to pay without the feds.
Somewhere in our brains, this doesn't compute. Shouldn't Goldman Sachs suffer along with the rest of us? Doesn't the firm owe some debt to the taxpayers before enriching its investors and employees? Can't the government ***** the firm to disgorge its profits into a needy citizens fund or something like that?
There certainly have been some problems with the whole financial bailout, which is so flawed that the only thing worse would probably have been no bailout at all. But the entire point of the bailout was to help the financial sector, and then the larger economy, get back to business as usual. Goldman is the first big bank to do that.
