Skip to main content

A case of Wall Street greed gone too far

By Susan Antilla, Special to CNN
updated 12:38 PM EST, Tue January 8, 2013
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
updated 9:17 AM EDT, Wed April 23, 2014
Alexander Motyl says as Russian President Putin snarled at Ukraine, his foreign minister was signing a conciliatory accord with the West. Whatever the game, the accord is a major stand down by Russia
updated 8:29 AM EDT, Wed April 23, 2014
Les Abend says at every turn, the stowaway teen defied the odds of discovery and survival. What pilot would have thought to look for a person in the wheel well?
updated 6:47 PM EDT, Tue April 22, 2014
Q & A with artist Rachel Sussman on her new book of photographs, "The Oldest Living Things in the World."
updated 3:58 PM EDT, Tue April 22, 2014
Martin Blaser says the overuse of antibiotics threatens to deplete our bodies of "good" microbes, leaving us vulnerable to an unstoppable plague--an "antibiotic winter"
updated 1:37 PM EDT, Tue April 22, 2014
John Sutter asks: Is it possible to eat meat in modern-day America and consider yourself an environmentalist without being a hypocrite?
updated 11:38 AM EDT, Tue April 22, 2014
Sally Kohn notes that Meb Keflezighi rightly was called an American after he won the Boston Marathon, but his status in the U.S. once was questioned
updated 8:56 AM EDT, Tue April 22, 2014
Denis Hayes and Scott Denman say on this Earth Day, the dawn of the Solar Age is already upon us and the Atomic Age of nuclear power is in decline
updated 4:36 PM EDT, Mon April 21, 2014
Retired Coast Guard officer James Loy says a ship captain bears huge responsibility.
updated 1:08 PM EDT, Mon April 21, 2014
Peter Bergen says the latest strikes are part of an aggressive U.S. effort to target militants, including a bomb maker
updated 9:45 AM EDT, Mon April 21, 2014
Cynthia Lummis and Peter Welch say 16 agencies carry out national intelligence, and their budgets are top secret. We need to know how they are spending our money.
updated 8:35 AM EDT, Mon April 21, 2014
Julian Zelizer says President Obama knows more than anyone that he has much at stake in the midterm elections.
updated 8:55 AM EDT, Tue April 22, 2014
Eric Sanderson says if you really want to strike a blow for the environment--and your health--this Earth Day, work to get cars out of cities and create transportation alternatives
updated 10:08 AM EDT, Mon April 21, 2014
Bruce Barcott looks at the dramatic differences in marijuana laws in Colorado and Louisiana
updated 4:47 PM EDT, Fri April 18, 2014
Jim Bell says NASA's latest discovery supports the notion that habitable worlds are probably common in the galaxy.
updated 2:17 PM EDT, Fri April 18, 2014
Jay Parini says even the Gospels skip the actual Resurrection and are sketchy on the appearances that followed.
updated 1:52 PM EDT, Fri April 18, 2014
Graham Allison says if an unchecked and emboldened Russia foments conflict in a nation like Latvia, a NATO member, the West would have to defend it.
updated 9:11 AM EDT, Fri April 18, 2014
John Sutter: Bad news, guys -- the pangolin we adopted is missing.
updated 2:25 PM EDT, Mon April 21, 2014
Ben Wildavsky says we need a better way to determine whether colleges are turning out graduates with superior education and abilities.
updated 6:26 AM EDT, Fri April 18, 2014
Charles Maclin, program manager working on the search and recovery of Malaysia Flight 370, explains how it works.
updated 8:50 AM EDT, Fri April 18, 2014
Jill Koyama says Michael Bloomberg is right to tackle gun violence, but we need to go beyond piecemeal state legislation.
updated 2:45 PM EDT, Thu April 17, 2014
Michael Bloomberg and Shannon Watts say Americans are ready for sensible gun laws, but politicians are cowed by the NRA. Everytown for Gun Safety will prove the NRA is not that powerful.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT