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If Wall Street Repents, Can Main Street Forgive?
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After a minister, a seminary president, and a former Goldman Sachs partner suggested in The Daily Beast that Goldman create a fund to invest in small businesses, the firm did just that. But now they say the Wall Street behemoth's path to redemption has just begun.
Last week in a post titled “Can Goldman Find God?” we called on CEO Lloyd Blankfein of Goldman Sachs to use his power, and that of his firm, to help Main Street by creating jobs. A few days later, Goldman announced the 10,000 Small Businesses Initiative, a pledge of half a billion dollars to provide access for small businesses to financial capital, mentors, networks, and business education. Though not called the “Virtue Fund” as we had suggested, it was a bold step in the right direction and targeted what America needs most: JOBS! Mr. Blankfein also issued an apology, acknowledging that Goldman had been participating in practices that were “clearly wrong,” which he regretted.
Even with all that’s gone wrong, we think Wall Street and Main Street need each other.
We were pleased that it was not one of those fake apologies we’re use to hearing, mostly from politicians—I’m sorry if I offended anyone—but an actual acknowledgment that Goldman had acted in ways that were “clearly wrong.” Though many are asking for details of what was meant by “clearly wrong,” the fact that CEO Blankfein admitted wrongdoing was admirable. Mr. Blankfein, you’re on the right track.
In light of these actions, is Main Street ready to forgive Wall Street?
No. It’s clear that Main Street is not accepting the apology, and it is certainly in no mood to talk about forgiveness. If you read our post from last Sunday, you'll come across some pretty vivid and imaginative suggestions from people regarding what they’d really like to see you do. Your recent announcement, for all its fanfare, does not seem to have changed that conversation much. Why? Well, regret is good, but it’s not good enough. There has been overwhelming damage caused by the collective irresponsibility of Wall Street, and Goldman’s current success stands in stark contrast to the pain American families are facing. As William Grieder points out in his article “Charitable Capitalism,” what has happened goes beyond a public-relations problem. It's a “political problem because public anger is gathering force and focus and scaring the bejeesus out of Washington polls.” (First God, now Jesus—we like where this conversation is going!)
• Charlie Gasparino: The Best Job No One WantsThe truth is, this is a lot more than a political problem. It is nothing less than a fundamental break in the relationship between Wall Street and Main Street. Main Street feels abused and betrayed by Wall Street, and it doesn’t believe Goldman Sachs and others really intend to change. But we think this relationship is worth saving. Even with all that’s gone wrong, we think Wall Street and Main Street need each other. Significant changes are required, however.
What’s it going to take from Wall Street? How about repentance? Repentance is a theological concept that isn’t normally associated with business practice, but that’s what Main Street needs from Wall Street. Repentance is the first step in healing a broken relationship. Yes, it starts with admitting wrongdoing and expressing sincere regret for it, but it goes far deeper than that. It demonstrates sincerity through definitive and dramatic action in a new direction, signifying a strong commitment to the relationship.
We think that the 10,000 Small Businesses Initiative is a great first step for Goldman Sachs to take in leading Wall Street in a profoundly new direction. Unlike those who see this move as “charitable capitalism,” we see it as an example of social change philanthropy. Whereas charity tends to see the recipient as a victim in need of help, social change philanthropy involves partnership. By focusing on business education, mentoring, networking, and access to capital, Goldman is bringing all its resources to bear.
It's a good first step, Goldman Sachs, so don’t stop now. Though this is the largest corporate charitable initiative ever announced, it is still not enough. We are calling on you to form a collective of other corporate players who have also come through this crisis with their pockets full to do something even bigger.
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Paul Schrodt is a writer living in New York City. He has contributed to New York magazine, Radar, and Esquire.com.
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Can Goldman Find God?
Jacki Zehner is the President of the Jacquelyn and Gregory Zehner Family Foundation and a Founding Partner of Circle Financial Group. She blogs at www.pursepundit.blogspot.com.
The Rev. Dr. Katharine Rhodes Henderson is the President of Auburn Theological Seminary in New York City, an institute for religious leadership, founded in 1818 with a history of commitment to progressive social causes from abolition of slavery to women's rights. She blogs at newsweek.washingtonpost.com/onfaith.
Can Goldman Find God?
Jacki Zehner is the President of the Jacquelyn and Gregory Zehner Family Foundation and a Founding Partner of Circle Financial Group. She blogs at www.pursepundit.blogspot.com.
The Rev. Dr. Katharine Rhodes Henderson is the President of Auburn Theological Seminary in New York City, an institute for religious leadership, founded in 1818 with a history of commitment to progressive social causes from abolition of slavery to women's rights. She blogs at newsweek.washingtonpost.com/onfaith.
Wherzmycountry
The biggest disconnect that we have is that Wall Street is well paid to force wages down, discard workers, and do everything in its power to increase profits, which is usually detrimental to its workers. Its mission is at cross purposes with high employment levels, fair wages, and fair benefits - though on the flip side, if one is lucky enough to own stock, he or she will enjoy a rising portfolio as a result of such practices. At this point we are rewarding people insane money for driving prices up (housing, commodities) while at the same time driving wages and benefits down (or out-via layoffs). There is only one solution I think, and that is high, progressive taxes such as were seen in past decades, in which the depressed wages of workers are bolstered by tax breaks. We cannot stop the market from carrying out to the extreme what its sole mission is - and that is squeezing profits out of everything (read: workers). The resulting rewards to those at the top have only driven the prices of everything sky high while wages have flatlined - and the average consumer has no more money to participate in the economy and can't possibly keep up with the rising standards enabled by obscene salaries and bonuses at the top. It is nice to have apologies and chartitable job creation - but that will not solve the gross inequities that are our biggest problem. Far too much money is being held at the top (and being wielded in our government to keep those at the top in power by thwarting any attempts at regulation). No matter what, we must reign in the inequities to some reasonable level, such as was seen in the 1950's and 1960's. Charitable job creation is an admirable beginning, but it must be accompanied by other bold initiatives which empower wages and benefits - because these are the most important factors in a strong economy.
periscope
Goldman-Sachs "charity" amounts to less than 5% of what they will distribute in bonuses this year to their executives. And unless we're willing to turn this horrible recession into a monstrous depression, Wall St. has to be regulated.
We can't afford to allow "derivatives" to be created without any oversight or control by public officials, who are actually willing and able to identify and stop these phony investments from burgeoning into a financial nightmare.
We also must find a way to counter the incentive to make "short term profits," at the expense of the national economy or long term gains for society. The way it has been and will continue to be on Wall St. and at our banks, executives are concerned with pushing up a stock or making a quick buck on some exotic investment scheme, and once they've made their millions (or billions) $$$, they then leave the rest of us holding the empty bag.
I suggest taxing "quick buck" scheme income at a 90% rate, while leaving long term gains at current low tax rates. It might introduce something into the "risk equation" that would discourage this kind of counter-productive behavior.
omahajim
its nice to know that i am personally more charitable that the entire goldman sachs organization. i give 3% of my gross pay to charitable causes. they give 5% of their BONUS PAY. its not the same.
and since warren buffet has jumped into this with goldman, let's talk about him. i have personally given more to local omaha causes that he has. he gave the neighborhood association, the local youth groups, and other omaha (his home town and where he has always lived) causes the same amount this year as last year.
not a dime. that's how much. do a google search for anything named buffett in omaha. best of luck. there is nothing to be found. he will only give to wall street charities. not local charities.
what an upstanding citizen he is. just like his buddies at goldman.
mmanion
He did give billions to the Gates Foundation. Granted, they are more interested in global initiatives than needs at home, but it's not really fair to suggest that Buffet is not an 'upstanding citizen' just because you don't agree with where his charitable donations went.
mmanion
I disagree with author's contention that this was a sincere apology just because they admitted wrongdoing. How could they not given the reams of evidence to support their malfeasance? These guys just publicly (and nauseatingly) patted themselves on the back for doing "God's work," which apparently included the wrongdoing they are just now having second thoughts about. That is not sincerity. It is delusional arrogance with a tiny dash of manipulative PR. There is no reason for Main Street to forgive Wall Street at this point because nothing has changed.
Jeremiah77
The question of whether the apology is sincere or not is not answerable. It might be, it might not be. I personally hate it when people judge me who do not even know me. What is important, however, is that they have, at least, done something. That is a lot more than the rest of Wall Street. Why haven't other firms stepped to the plate. How many firms received money from the government? It was in the hundreds.
This does not get GS off the hook, however, and you are right, it is crazy to call it God's work. God's work is helping the poor, feeding the hungry, loving one another, and forgiving. I think both Wall and Main Street (me included) need to work on this. The question is: "if nothing has changed" as you contend, then what does it take? Is it more regulation? Is it main street refusing to buy Wall Street's stocks? Is it a higher tax on Wall Street profits?
I don't believe that we will solve this problem unless we regain our ethical compass. That includes both Wall and Main streets. But that is another discussion . . . .
Jeremiah77
One more thing. Please rethink your stance on repentance. The only people I know who don't believe in repentance have either (1) never been wrong, or (2) have no relationships with others because they can't forgive.
We all mess up every now and then - we need a way to reconciliation or this world will literally blow up.
Micallef2
Jacki Zehner's Purse Pundit blog includes her role at Goldman Sachs, "I was a corporate cheerleader to the utmost degree, and for that reason and my trading profitability, I was promoted."
Lloyd Blankfein the perennial object of Jacki's admiration, said that the bank "participated in things that were clearly wrong and have reason to regret." That is Lloyd Blankfein's legacy, in his own words.
I posted a note on Jacki's blog last week describing the terrible financial and emotional pain caused by her friend to millions of people like me.
Her reply ignored my questions and asked but offered me the comfort of her, "best wishes."
I offered Jacki advice. In return for my polite, constructive advice based on my painful experience, I will accept Jacki's check because your money will mean more to both us than your words. She did not reply to my thoughtful request, so I will ask again for money.
I could not imagine how cruel and ignorant Jacki Zehner is until I read her Daily Beast article today. It's impossible for normal people to invent Jacki's direction, "What's it going to take from Wall Street? How about repentance?...Yes, it starts with admitting wrongdoing and expressing sincere regret for it, but it goes far deeper than that. It demonstrates sincerity through definitive and dramatic action in a new direction..."
I do not believe in repentance. I do believe in the healing power of money and Jacki Zehner knows where to send my check.
Other Daily Beast readers in similar predicaments can ask Jacki, Lloyd and others for money to relieve your pain...unless belive in repentance.
Jeremiah77
I sense your pain, but I think it is clouding your judgment. Ms. Zehner left Goldman in 2002. Is she responsible for your predicament? How do you know that she has been Lloyd's cheerleader over the last 7 years - he was not the head of the firm when she left. And moreover, why does she owe you a check - did she force you to make the investments that went south or was that your own decision? Is Goldman solely responsible for your losses or do you, the US government, and the entirety of Wall Street bear the joint responsibility? You paint all 25,000 employees of Goldman with the same brush. Do you do this with entire races of people as well?
Jeremiah77
Oops, I sent my reply in the wrong place (see above) I repent!!!!
Micallef2, please rethink your stance on repentance. The only people I know who do not believe in repentance (1) have never been wrong, or (2) have no relationships because they can't forgive others.
We all mess up now and then. If there is no repentance, forgiveness, and reconciliation, then this world will literally be blown up.
Katurian
Micallef2 - "I do not believe in repentance. I do believe in the healing power of money..." Are you kidding me?! You clearly have a loathing for Wall Street and all those involved, but do you seriously expect anyone to take you seriously when your bottom line is the same as Goldman Sachs?
Money is not the healing power you claim it to be, and as someone who claims to have been painfully hurt by corporate greed, you should know this better than anyone. You can claim that Goldman Sachs' initiative is a little to late, that it's just a PR move, that it won't achieve anything worthwhile, but at least it's something. It's a step in the right direction, and I personally prefer a step with a minute chance of success over no step at all.
And just so you know, I do not work in the finance industry. Quite the opposite as I have been an artist for the past ten years. In those ten years I have never had more than $500 in my bank account, I will most likely never own my own property, and having retirement funds is going to be a nearly insurmountable task. But I do have a job that I love (even when I'm doing it for free), a beautiful family and a wonderful community of friends. And I'm truly happy. Imagine that.
GPatton
What we're seeing is the next step of the "financialization" of the US economy. The banks "lost" more than they ever "gained" in profits during the Regan/Clinton Era. The decline in value of real estate and equity etc. holdings has been $7 trillion since the meltdown started, but Goldman and the other banksters-- though they were responsible for or complicit in the worst financial debacle in history, dwarfing all the rest, conbinded, i.e. Mississippi Co. South Sea Island Bubble, Tulipmania, etc. -- have been bailed out. They think it's business as ususal. And the "recovery" if you can call it that, will be jobless because the USA has been turned into one big money chaning operation for the big banks. Until we reconfigure the economy and make it productive and return to supporting a middle class, we're in deep kimshi. Throw the banksters in jail where they belong! George Patton
periscope
American industry and jobs have been shredded by third world labor and executive greed. As a society we have failed to understand that having industries that provide jobs (renewable energy, environmentally friendly technologies, education oriented work, etc.) not only helps us financially, but also builds a stable society.
We have floundered since the time of Jimmy Carter and the spike in oil prices. It's long past time that we develop a national strategy to deal with unemployment, environmental preservation and improving education. We can't go on much longer as we have these past 30 years.
Thank you.
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