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the greatest depression

What Should Goldman Sachs’s New PR Strategy Be?

Last week, as you know, Goldman Sachs CEO Lloyd Blankfein apologized for "participating in things that were clearly wrong" that they "have reason to regret." As we predicted, no one found this mea culpa particularly satisfactory. The Times, in particular, after thinking through it for a few days, ripped the firm a new one this weekend. The apology, they said in an editorial, was "hollow," especially so long as Goldman continued to insist they did not need the $12.9 billion funneled to them via the taxpayer bailout of AIG, claims that the paper called "absurd."

It is widely and correctly understood that Wall Street, with Goldman as a leader and with regulators in thrall, helped to inflate and profited from a credit bubble that burst and cost tens of millions of Americans their jobs, incomes, savings and home equity. American taxpayers continue to stand behind the bailouts and other government interventions that have stabilized the financial system, including Goldman, enabling the firm to post blowout profits in 2009 and to set aside $16.7 billion for bonuses so far this year.


Goldman spokesman Lukas Van Praag then offered the Times a rebuttal to the recent report from the bailout’s inspector general that implied Goldman's survival may have hinged on the AIG bailout. In it, Van Praag reiterated Goldman's claims that their exposure to AIG "was close to zero," and ended on a note that proves the company still doesn't get it.

Finally, there is no linkage between the AIG rescue and compensation.


[Screams] Obviously, we're going in circles here. And clearly, Goldman's chosen public-relations strategy — bulldozing through the problem with trademark arrogance — is not really working. (Insofar as they have chosen a strategy: "Some people come in and say, ‘You are doing too much. Don’t say another word.’ Other people say we should get on the talk shows," Lloyd Blankfein said at the same conference where the apology was made.) Their jokes amused no one. Setting up a fund to help small businesses failed to impress ("crumbs from the table," the Times editorial called the $500 million donation, the largest in the firm's history), and offering to have some underlings take out the trash on Thanksgiving was too small a gesture. No one's buying any of it, and their business is suffering. Which means, ironically, that we may end up suffering, as the government obviously feels Goldman is too big to fail.

So we'd like to open it up to you, the people. What would it take for you and Goldman Sachs to get along again, to put an end to this godforsaken conversation? The Times suggests they donate their bonus money to the federal Bureau of the Public Debt, but there's no way that's going to happen, if only because they are way too cocky to go ahead and do exactly what the Times says. So we'd like to open up a forum down below that Lloyd et al can check out with utter deniability. What do we want to see next? Do we need them to physically open up their books and reveal the hedge positions that prove they did not need the AIG bailout to survive? Do we just want them to admit that, while they may be talented traders, that they are not actual soothsayers who would have been actually able to predict what would have happened if AIG had collapsed, which Van Praag indicates they are in his letter?

The SIGTARP report states that an AIG collapse “might have made it difficult for Goldman Sachs to collect on the credit protection it had purchased” (emphasis added) — however, it might not, and it is our belief that it ultimately would not have done so.


[Screams, again] Or do we need to go more extreme? We personally don't think, like Charlie Gasparino, that we should start calling for Blankfein's resignation, because driving out the head of one of our only remaining successful financial institutions seems, well, rather like cutting off nose to spite face. But maybe a little walk on a bed of nails and/or hot coals is in order? Would a parade of self-flagellation do the trick? Discuss.

Goldman’s Response to Questions About A.I.G. [DealBook/NYT]
Fixing Wall Street’s Spin Problem [DealBook/NYT]

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