Apparently, investment bank Goldman Sachs and billionaire investor Warren Buffett are trying to do their part to help the ailing U.S. economy by lending a hand to small business. Although few fault Buffett for his billions, mere millionaire bankers at Goldman Sachs have come under fire in recent months when reports surfaced that their earnings, and consequently bonuses, are exceeding even wildly optimistic expectations. But they're swooping in to give something back to the small businesses that they traditionally haven't paid much attention to. Let's break down the initiative.
Business and Management Education: Small business owners will receive practical business education delivered through partnerships between local community colleges, universities and other institutions. 10,000 Small Businesses will contribute $200 million to these partners to provide scholarships predominantly to underserved small business owners and build educational capacity.
Yes, because that business education served the financial community so well over the past few years, steering them away from taking poorly calculated risks and nearly bringing the entire economy down. Of course, I'm exaggerating. Formal business education is not totally worthless. Just mostly worthless. While a nice initiative, I'm pretty unconvinced this will do much for jobs, especially in the near-term.
Mentoring and Networking: Advice, technical assistance, and networking will be offered to participating small business owners through partnerships with national and local business organizations, as well as the people of Goldman Sachs.
And who wouldn't want a Goldman Sachs banker as their mentor? I'm sure they'll totally be able to relate to small business owners in Topeka from their swanky Broad Street headquarters in downtown Manhattan. All that flash trading experience will give them lots of practical advice too for bait-and-tackle shop owners.
Access to Capital: Goldman Sachs will invest $300 million through a combination of lending and philanthropic support to Community Development Financial Institutions (CDFIs). The investment will increase the amount of growth capital available to small businesses in underserved communities and expand the capacity of the CDFIs to deliver enhanced technical assistance to small businesses. 10,000 Small Businesses will provide technical assistance to graduates of the program to help them access other sources of capital.
Pardon me if I'm unimpressed, but it sounds to me like they're going to be so generous as to lend to firms smaller than they're used to. Quick somebody call the Pope to make sure there's still time to consider them for sainthood this year! I'm probably being a little unfair, as in a sense, there could still be some cost involved. Even if they do turn out to make money off this funding, the return on capital will likely be less than what they're used to. And some of this might include actual donations. Maybe.
Advisory Council: 10,000 Small Businesses will be guided by an Advisory Council co-chaired by CEO Lloyd C. Blankfein, Warren Buffett, and Dr. Michael Porter of Harvard Business School. The Advisory Council will assist in the development, execution and evaluation of the program.
I'm sure a great deal of tailored, individual advice will be provided to those 10,000 companies by these few individual financial titans. More council members will be involved, but those are the clear headline names, with the rest of the pack far behind in prominence and business savvy.
The total price tag of this initiative is a mere $500 million. That might sound like a lot to you or me, but it's a drop in the bucket for Goldman. Possibly less if the $300 million portion funding portion really consists mostly of loans instead of charity. Meanwhile, Goldman's 2009 bonus pool is said to be around $23 billion. So that amounts around 2% of their bonus compensation. Some people put a higher portion of their income than that into their church offering cup each year.
Maybe I'm crazy, but I don't think this initiative, though a pleasant effort, will have many angry Americans putting down their pitchforks currently pointed at Goldman. If Goldman really wants to impress anyone, they're going to have to do a little better than this.
This is a most curious matter. Many Americans now feel that those who economically destroyed our nation should no longer be its economic leaders. That is not a remarkable demand. But of course, here they are, in this very article. We have no new lights, only the old ship-sinking lights.
People want to see some punishment. They do not want to over and over see a wealth transfer going from the poor to the rich. I financially live as an entrepreneur. For American business to survive, we need real temperance when all we currently have is arrogance and effective theft. This is the reality of what people truly feel. They’re angry.
However, they are also confused and manipulated by the whole Red/Right Blue/Left conflict and so distracted from that which they need to unite over. People feel that they must stop those who are destroying our nation, including the complicit agencies of the US Government and those to whom our last and present administrations have transferred the wealth of the people of the United States. There is frustration afoot among everyone. People indeed wonder: whose money was given without a vote or any real public discussion in advance?
This article can be read as a gesture of appeasement or as a purposeful PR stunt complete with a big contest show cash giveaway concocted by the ad men of the bad boys who drink the nation’s economic blood (and audaciously offer a small portion of it back to them!) as if the US people were slaves and not free citizens in a great democratic nation. My opinion is that we need to recognize bad acting when we see it. That's for starters. What relative little is being offered is not remotely enough to cover the injustice handed to the people of the US by its perpetrators. I give a thumbs down, sorry! Thumbs up to a participant and not a dazed democracy
I was laid off from Goldman Sachs on November 17, 2009 (a year ago). At that time we were all given severances of three months to a year. Upper management got a year -- support staff got three months. Everyone laid off had been with the company over five years. They laid off 15 percent of its workforce simply so they could get the free bailout money. Everyone in my area that got laid off had been excellent employees and had all gotten excellent reviews over the years. They did not offer early retirement, it was not last in/first out, they did not ask if anyone wanted to leave -- they just cut people. The issue lies at the people they chose to cut. Out of the 15 in our office that got cut only three were men -- all of them in management or professions. Out of the 15 let go, nine of them were women over the age of 40. Out of the 15, two were disabled (both had worked for the company over 15 years each), one in a wheelchair and one legally blind. One person had been with the company 29 years and they called him and laid him off while he was in his hospital bed on medical leave facing surgery. Out of the 15 people let go, eight had had recent serious illnesses and now their health is in jeopardy because of the high cost of health insurance. In this past year, at least two of the 15 has had to file Chapter 13 and three are at risk losing their homes, one already lost her home. Now to show you just how dirty this company is -- they took the bailout money because heaven knows if they went under the country would be ruined, and within weeks of laying these loyal, hardworking, experienced people (albeit ones with health and disability issues as well as being older women), they started advertising for their replacements. The accountant who was in the hospital had his job advertised before he even was laid off. The reasons we were told they were laying us off was that they couldn't afford us -- yet they paid everyone pretty good severance packages and replaced every employee before their severance even ran out! They never offered the displaced experienced employees their jobs back. Add that to the fact, that Goldman now brags that they are paying all of their employees a bonus this year that averages $700K per person, not to mention that they paid bonuses last year when they were doing so badly that they needed bailout money and they laid off 15 percent of their staff. One of those $700K bonuses would have paid a year's salary for everyone who had been laid off in my division. One bonus. How many bonuses did the pay? They laid off people who had given many good years to the company, had many good years to still give, had gotten excellent reviews throughout the year, who had experience and job knowledge and specifically put people out of the street who would have trouble finding work due to age and disability. So what is my take? If a company lays people off and then shows such a significant profit that they can pay huge bonuses, then they didn't need to lay the people off, then they need to be footing the entire bill for the laid off people's unemployment benefits as long as they are turning a profit that could have paid for those employees to continue at their jobs. There is NO reason the government should be footing the unemployment bill for Goldman Sachs employees. If they have the money to replace those employees immediately, then they certainly did not need to take the bailout money, and ultimately they did not need to lay off the experienced, respected employees. This is all just spin. They need to rehire the people they kicked to the curb and do the right thing.