Another day, another Goldman Sachs Group Inc. (NYSE:GS) rumor-laden story. The New York Post is the latest media outlet to wade into the Goldman bashing -- a favorite topic of the paper long before Matt Taibbi's Rolling Stone feature.
The tabloid reported Tuesday that CEO Lloyd Blankfein speaking to staff about the second-quarter profit of $2.3 billion warned employees to refrain from making big lavish purchases, hoping the move would avoid the spotlight and any added potential negative attention. The New York bank holding company's image recently took a hit from Taibbi's highly politicized Rolling Stone story among others for allegedly profiting from the downfall of American International Group Inc. (NYSE:AIG).
"This is a sensitive time for us, and [Blankfein] wants to make sure that we're not being seen living high on the hog," one unnamed Goldman executive allegedly told the Post.
Blankfein's purported concern is well warranted; after all, the U.S. economy is suffering through its worst job loss since the Great Depression with some predicting that employment levels seen before the recession may not be reached until 2013, according to Reuters.
To reinforce his message, Blankfein, as rumor has it, has warned his employees that even though Goldman posted a second-quarter profit of $2.3 billion, they shouldn't have high expectations of bonuses just yet as bonuses are based on full-year results.
Perhaps, since Goldman by many is considered to set the standard on Wall Street, Blankfein should follow recommendations of reformers and reward bonuses based on a long-term timeline that could be partly or fully made in restricted stock redeemable over a number of years. While it's easier said than done, at least Blankfein is acknowledging there is a problem, but the next step is taking a harder stand that mutually benefits his company and the overall financial system. - Gerald Magpily
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