Goldman Sachs (GS) has apparently decided that it has a public relations disaster on its hands and is starting a campaign to turn that around. The firm has pledged $100 million a year for programs to help small businesses. The pledge will be fulfilled annually for five years for a total commitment of $500 million, and will be overseen by a panel headed by Warren Buffett. Specific items to be included in the "good works" are business education, technical assistance and venture capital investments. Presumably the venture capital part will have a possibility of providing a return to Goldman.
Here is an excerpt from an article at ft.com by Francesco Guerrera, Justin Baer and Tom Braithwaite:
Lloyd Blankfein, Goldman’s chief executive, told a corporate conference in New York that the bank regretted taking part in the cheap credit boom that had fuelled the pre-crisis bubble. “We participated in things that were clearly wrong and have reason to regret,” said Mr Blankfein. “We apologize.”
Mr. Blankfein also told the conference he wished he had not told the UK’s Sunday Times newspaper that Goldman did “God’s work” – a remark that was seized upon by the bank’s critics – and said it had been meant as a joke.
The statements of apology were delivered early in the day Tuesday, hours before a separate announcement was made regarding the small business initiative. Warren Buffett said that this was not a reaction by Goldman to recent criticism, but a legitimate business initiative. The timing implies otherwise, coming after several publicity gaffs including a couple of instances of reference to the religiosity of Goldman's business activities. See here and here.
Now that Goldman has decided to invest in Main Street (to the extent of about one day's trading per year, according to the ft.com article), when will they start working on the trillions the financial crisis has cost the taxpayer? After all, shouldn't they cover all bases with their apology?
Note: In an article by Gwen Robinson at ft.com/Alphaville (here), it was stated that Lloyd Blankfein, CEO, stressed that Goldman’s small-business initiative had been planned for a year. Of course, the timing in relation to all the bad publicity recently must just be coincidence.