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Goldman Sachs set to pay out record bonuses
As profits at the Wall Street firm leapfrog expectations its employees are expected to trouser bumper pay packets this year
Levels of pay at Goldman Sachs are expected this year to surpass the records set before the financial downturn hit the global economy. On Tuesday the Wall Street firm reported its highest-ever earnings in the second quarter, hitting $3.44bn profit for the period. The number stunned analysts and represented a 65 per cent jump on last year, on sales of $13.76bn. As a result of its performance staff are expected to share a bumper $22bn payday, or $770,000 per employee.
Goldman chief executive Lloyd Blankfein said of the figures: "Our second-quarter results reflected the combination of improving financial market conditions and a deep and diverse client franchise."
The surge in income comes as a result of the pain felt by its competitors in the period, as Goldman gained business from rivals and took advantage of the lack of willingness to take risk by others. The $3.44bn net profit was more than the firm made in the whole of 2008, when it suffered as the downturn took hold.
The scale of the earnings and payouts has already begun to cause ripples outside the banking world. With public revulsion at the level of executive remuneration already established, these payouts will catch the eye.
Politicians too will be forced to confront the issue, with taxpayers' money instrumental in supporting the very markets Goldman deals in.
WHAT THEY ARE SAYINGRob Cox and Anthony Currie, in the Daily Telegraph: "It would be easy for Goldman Sachs employees to forget there’s a financial crisis still going on. The Wall Street firm posted stunning second-quarter earnings and set aside a record amount of treasure to pay staff. But Goldman’s minions would be wise to tip their hats to the contributory role of the very visible hand of the taxpayer. Markets may still be rough, but the biggest remaining risk to Goldman’s franchise could be a political and public backlash against the group’s profits - and particularly its pay."
Roy Smith, a finance professor at New York University and a former Goldman partner, in the Wall Street Journal: "Right now, [Goldman is] one of only a few people on the beach, so they're getting all the girls. It's about to get more crowded, though." ·
