Skip to main content

A case of Wall Street greed gone too far

By Susan Antilla, Special to CNN
January 8, 2013 -- Updated 1738 GMT (0138 HKT)
Goldman Sachs CEO Lloyd Blankfein was one of the executives whose stock award was accelerated to beat higher tax rate.
Goldman Sachs CEO Lloyd Blankfein was one of the executives whose stock award was accelerated to beat higher tax rate.
STORY HIGHLIGHTS
  • Goldman Sachs granted $65 million in stock to execs before new tax rates began
  • Susan Antilla says the firm's CEO had endorsed higher rates, called for entitlement cuts
  • She says Goldman benefits from the implicit promise that U.S. will bail it out
  • Antilla: It was unseemly for Goldman to rush the payments to shield execs from new rates

Editor's note: Susan Antilla is a columnist at Bloomberg View and a contributor to TheStreet.com. She has written about finance for more than 30 years. She is author of "Tales From the Boom-Boom Room: The Landmark Legal Battles That Exposed Wall Street's Shocking Culture of Sexual Harassment." Follow her on Twitter @antillaview.

(CNN) -- Nobody likes to pay taxes, so can you blame the good folks at Goldman Sachs & Co. for doing what they could to avoid the higher rates that kicked in on January 1?

While the rest of us were donning our party clothes on New Year's Eve, the legal worker bees at Goldman were pushing the send button on 10 regulatory filings to the Securities and Exchange Commission.

By the time the ball dropped in Times Square, regulators had been notified that $65 million in Goldman stock had been granted a month early, helping a cluster of powerful multimillionaire executives trim their tax tab.

Among the 10 who shared that $65 million, Chief Executive Officer Lloyd Blankfein, Chief Operating Officer Gary Cohn and Chief Financial Officer David Viniar wound up with $8.4 million apiece in Goldman stock.

Susan Antilla
Susan Antilla

Blankfein's compensation in 2011 was $16.2 million. Cohn and Viniar that year made $15.8 million. Even Gordon Gekko would be impressed to see that bosses making that much money were able to catch a tax break for a couple hundred thousand.

The 10 executives who skirted 2013's higher rates were not the only Goldmanites who benefited from the "accelerated" vesting. Michael DuVally, a Goldman spokesman, acknowledged there was "a group larger than" the 10 but declined to say how many. DuVally would not comment on who made the decision to grant the shares early.

The shrewd Goldman move is hardly unique among rich business executives or even 99 percenters of more modest means. It was no secret that higher taxes were coming this year, and taxpayers of all shapes and sizes did what they could to ensure that "tax events" would occur in 2012.

Become a fan of CNNOpinion
Stay up to date on the latest opinion, analysis and conversations through social media. Join us at Facebook/CNNOpinion and follow us @CNNOpinion on Twitter. We welcome your ideas and comments.



Even environmental activist and Nobel Prize winner Al Gore tried, albeit without success, to unload his Current TV to Al Jazeera before the new year dawned.

What makes the Goldman move distasteful is that it wasn't even two months ago that CEO Blankfein was mouthing off in a Wall Street Journal op-ed that he endorsed tax increases "especially for the wealthiest" -- along with a plug to cut entitlements to all you freeloaders out there.

Goldman Sachs CEO talks with CNN
Goldman Sachs CEO on fiscal cliff
Obama hails fiscal cliff deal

If you're pushing the position that the rich should pay more to help fix the deficit, it doesn't quite follow to employ a tax dodge, says Dennis Kelleher, president of the Washington-based public interest group Better Markets Inc.

"Goldman's quickie year-end tax shenanigans deprived the government of what it otherwise would get," he says. "So they either cause the debt to go up, or cause others to pay more by the taxes they are avoiding."

DuVally, the Goldman spokesman, declined to comment when I asked whether it was inconsistent for Goldman to make a move for its executives to avoid taxes after Blankfein endorsed increases for the wealthy.

I've got to hand it to Goldman. The firm is a master of the "have-your-cake-and-eat-it-too" brand of politics and public relations. One minute, Goldman is cranking out press releases about its devotion to women entrepreneurs in its philanthropic "10,000 women" program. The next, it is announcing its annual list of new partners that includes a paltry 10 women but 60 men.

Goldman was a victim on the defensive when Greg Smith, a former employee, wrote a New York Times op-ed on March 14, blasting the firm for having "morally bankrupt people" who needed to be weeded out. You could almost feel sorry for poor Goldman, which shipped out a memo reminding employees that their estimable employer had been named one of the best places to work in the United Kingdom only weeks before the London-based Smith's "Why I Am Leaving Goldman Sachs" essay.

By the time Smith published a book seven months later, the firm had turned ruthless revenge-seeker, even sharing parts of Smith's self-evaluations with the media. A "best place to work?" Really? Careful what you say in the press -- and in your HR file -- if you get your paycheck from a Goldman-style operation.

The brouhaha over Smith's op-ed and book stirred up debate of the "What did you expect of an investment bank operating in capitalistic society?" type.

Fair enough. Banks are not in the philanthropy business -- even if they spend as much time as Goldman does talking about its good deeds and famous "business principles." ("Our clients always come first" is famously No. 1 on the list.)

At Goldman and other "too big to fail" banks, though, employees walk through the doors each morning knowing that the rest of us will be forced to bail them out again should another crisis ensue. We taxpayers provide the insurance policy that they enjoy without ever sending us premiums. In October of 2008, Goldman got $10 billion in taxpayer money from the Troubled Asset Relief Program, which it ultimately paid back.

Blankfein, like other bank CEOs, would later make the case that Goldman wasn't "relying on" that government help.

But leaf through the tomes of some of the regulators who lived through the crisis, and you start to wonder whether our tax-dodging heroes might be out of jobs today if the public hadn't fronted a bailout.

From "Bull by the Horns," by former Federal Deposit Insurance Corp. chairman Sheila Bair: Goldman and Morgan Stanley were "teetering on the edge" in the fall of 2008.

From "Bailout: An Inside Account of how Washington Abandoned Main Street While Rescuing Wall Street," by Neil Barofsky, former special inspector general to oversee the Troubled Assets Relief Program: Federal Reserve chairman Ben Bernanke "confided that he believed that Goldman Sachs would have been the next to go" after Morgan Stanley.

We need to change the conversation here.

Goldman and its too-big-to-fail brethren are banks that accepted welfare and are in debt to U.S. taxpayers for averting disaster. This hasn't been about hard-nosed capitalism since those first TARP wire transfers made their way into Goldman Sachs' coffers.

As for the bank's recent tax-reduction maneuver, it's another reminder that Goldman's management is either clueless about how bad it looks or doesn't care. Sometimes bad PR is a just a cost of doing business.

Follow @CNNOpinion on Twitter

Join us at Facebook/CNNOpinion

The opinions expressed in this commentary are solely those of Susan Antilla.

ADVERTISEMENT
Part of complete coverage on
July 9, 2014 -- Updated 2047 GMT (0447 HKT)
World War I ushered in an era of chemical weapons use that inflicted agonizing injury and death. Its lethal legacy lingers into conflicts today, Paul Schulte says
July 9, 2014 -- Updated 2153 GMT (0553 HKT)
Mel Robbins says many people think there's "something suspicious" about Leanna Harris. But there are other interpretations of her behavior
July 9, 2014 -- Updated 2006 GMT (0406 HKT)
Newt Gingrich warns that President Obama's border plan spends too much and doesn't do what is needed
July 9, 2014 -- Updated 1753 GMT (0153 HKT)
Amy Bass says Germany's rout of Brazil on its home turf was brutal, but in defeat the Brazilian fans' respect for the victors showed why soccer is called 'the beautiful game'
July 8, 2014 -- Updated 1754 GMT (0154 HKT)
Errol Lewis says if it really wants to woo black voters away from the Democrats, the GOP better get behind its black candidates
July 9, 2014 -- Updated 2107 GMT (0507 HKT)
Aaron Carroll explains how vaccines can prevent illnesses like measles, which are on the rise
July 9, 2014 -- Updated 0008 GMT (0808 HKT)
Aaron Miller says if you think the ongoing escalation between Israel and Hamas over Gaza will force a moment of truth, better think again
July 8, 2014 -- Updated 2241 GMT (0641 HKT)
Martin Luther King Jr. fought and died so blacks would no longer be viewed as inferior but rather enjoy the same inherent rights given to whites in America.
July 9, 2014 -- Updated 1147 GMT (1947 HKT)
Alex Castellanos says recent low approval ratings spell further trouble for the President
July 9, 2014 -- Updated 0349 GMT (1149 HKT)
Paul Begala says Boehner's plan to sue Obama may be a stunt for the tea party, or he may be hoping the Supreme Court's right wing will advance the GOP agenda that he could not
July 6, 2014 -- Updated 1659 GMT (0059 HKT)
The rapture is a bizarre teaching in fundamentalist circles, made up by a 19th-century theologian, says Jay Parini. It may have no biblical validity, but is a really entertaining plot device in new HBO series
July 7, 2014 -- Updated 1749 GMT (0149 HKT)
Ruben Navarrette: President Obama needs to send U.S. marshals to protect relocating immigrant kids.
July 8, 2014 -- Updated 1903 GMT (0303 HKT)
Norman Matloff says a secret wage theft pact between Google, Apple and others highlights ethics problems in Silicon Valley.
July 8, 2014 -- Updated 2237 GMT (0637 HKT)
The mother of murdered Palestinian teenager Mohammed Abu Khder cries as she meets Palestinian president Mahmoud Abbas in Ramallah, West Bank on July 7, 2014.
Naseem Tuffaha says the killing of Israeli teenagers has rightly brought the world's condemnation, but Palestinian victims like his cousin's slain son have been largely reduced to faceless, nameless statistics.
July 9, 2014 -- Updated 2028 GMT (0428 HKT)
Danny Cevallos says charging the dad in the hot car death case with felony murder, predicated on child neglect, was a smart strategic move.
July 8, 2014 -- Updated 1326 GMT (2126 HKT)
Van Jones says our nation is sitting on a goldmine of untapped talent. The tech companies need jobs, young Latinos and blacks need jobs -- so how about a training pipeline?
July 7, 2014 -- Updated 1309 GMT (2109 HKT)
A drug that holds hope in the battle against hepatitis C costs $1,000 per pill. We can't solve a public health crisis when drug makers charge such exorbitant prices, Karen Ignagni says.
July 7, 2014 -- Updated 1133 GMT (1933 HKT)
Julian Zelizer says our political environment is filled with investigations or accusations of another scandal; all have their roots in the scandal that brought down Richard Nixon
July 6, 2014 -- Updated 1814 GMT (0214 HKT)
Sally Kohn says Boehner's lawsuit threat is nonsense that wastes taxpayer money, distracts from GOP's failure to pass laws to help Americans
July 7, 2014 -- Updated 1526 GMT (2326 HKT)
Speaker John Boehner says President Obama has circumvented Congress with his executive actions and plans on filing suit against the President this month
July 7, 2014 -- Updated 1331 GMT (2131 HKT)
Hands down, it's 'Hard Day's Night,' says Gene Seymour-- the exhilarating, anarchic and really fun big screen debut for the Beatles. It's 50 years old this weekend
July 2, 2014 -- Updated 2201 GMT (0601 HKT)
Belinda Davis says World War I plunged millions of women across the globe into "men's jobs," even as they kept home and hearth. The legacy continues into today.
July 3, 2014 -- Updated 1824 GMT (0224 HKT)
Pablo Alvarado says all the children trying to cross the U.S. border shows immigration is a humanitarian crisis that can't be solved with soldiers and handcuffs.
July 3, 2014 -- Updated 1151 GMT (1951 HKT)
Elizabeth Mitchell says Frédéric Auguste Bartholdi dreamt up the symbolic colossus not for money, but to embody a concept--an artwork to amaze for its own sake. Would anyone do that today?
July 2, 2014 -- Updated 1601 GMT (0001 HKT)
Wendy Townsend says Jamaica sold two protected islands to China for a huge seaport, which could kill off a rare iguana and hurt ecotourism.
ADVERTISEMENT