“a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.” They have been scrambling to fix it. And then there was the issue of allowing clients betting on the failure of financial products to help create those same financial products doom to fail. That cost Goldman a mere $550 million or about two weeks of profits. With public not happy about the bank bailouts and Wall Street in general, Goldman released a new standard on ethics for the business, which goes beyond simply following the regulations, but complying with spirit as well.
Unfortunately, someone forgot to send those to the division working on Facebook deal. The deal simple is Goldman is giving $450 million to Facebook for the right to sell certain number of private shares. Goldman then created a holding company for those shares to sell them to private investors and circumvent SEC regulation. William Cohan has a great breakdown of the deal. Goldman, indeed, has learn to make a fine profit. So, should we be concerned? Or should we applaud their ingenuity?
First, it must be pointed out that as a bank holding company, they have access to almost interest free loans from the FED. The FED made these loans available to help spur the economy. Added to this fact that Goldman is one of those firms that is deemed too big to fail, and in a real sense the US Tax payer is fitting the bill if the deal goes bad. And what are we getting for insuring this deal? Jobs? Not really. Maybe a few resort jobs to serve the super rich, but hopefully they will be good tippers. Cleaning bathrooms for minimum wage plus tips can’t be that bad. Wealth? Well Mark Zuckerburg has gotten richer off the deal, but with Goldman changing the details of the deal to exclude American investors to further avoid the reach of the SEC, few Americans will see a penny of this deal. Goldman’s tentacles have found a new deep sea well to dig and it our blood on the line.