Last week the Financial Crisis Inquiry Commission unsealed a recorded interview with Goldman Sachs CEO Lloyd Blankfein from last June. In it, Blankfein took the financial high road, speaking out against raising Wall Street salaries, which failed to reflect how the firm performed. “We think the world is going in a poor direction," said Blankfein. "We think having high fixed salaries for people, or guarantees for people and lower contingent comp actually is worse behavior.” What if the lower ranks objected? Blankfein assured interviewers, “My salary’s been the same for 20 years.” Instead, he said Goldman Sachs was in favor of paying bonuses that were more closely tied to results. Eight months later, however, the company more than tripled Blankfein's salary from $600,000 to $2 million. Wait, you didn't think he meant for the salary cap to apply to him, did you? No, when he pointed out his own salary he was merely, uh, next question. But surely the significant salary bump (three of Blankfein's executives also gave themselves a raise) was for a job well done, right? Not so much, according to Bloomberg. In January, "Goldman's shares fell the most in almost two months after the firm reported its third straight quarterly earnings decline, led by a slowdown in trading and investment banking revenue."
During the June interview, Blankfein also said, "If we could do it, we would have their bonus be 100 percent of their comp." It seems as though financial regulatory agencies might have taken his statements at their word. New U.S. rules on bank pay, approved for public comment by the Federal Deposit Insurance Corp. on February 7, aimed only at bonuses and left salaries untouched. That was around the time that Goldman followed Morgan Stanley's, UBS AG's, and Citigroup's examples in raising base salary for employees and executives. Focusing the Fed's resources on bonuses while pumping up your salary? Lloyd's manipulation skills alone deserve that raise. In fact, we think Goldman should throw in a little extra for the man who set a Wall Street record for bonus pay in 2007 (at a cool $67.9 million) while still managing to sound like a humble, twenty-year same-salary veteran.