Blankfein: we do God's work

Goldman Sachs chairman and chief executive Lloyd Blankfein has launched a dramatic defence of his profession, telling a newspaper that bankers are &ldquo;doing God&rsquo;s work&rdquo;.<br /><br />&ldquo;We&rsquo;re very important. We help companies to grow by helping them to raise capital. Companies that grow create wealth. This, in turn, allows people to have jobs that create more growth and more wealth. It&rsquo;s a virtuous cycle,&rdquo; he said in an interview with the Sunday Times. He also defended banks&rsquo; &ldquo;social purpose&rdquo;.<br /><br />In a spirited approach, Blankfein &ndash; who paid himself $68m (&pound;41m) in 2007 &ndash; added that the public should welcome the return to huge bonuses.<br /><br />&ldquo;I don&rsquo;t want to put a cap on employees&rsquo; ambition. It&rsquo;s hard for me to argue for a cap on their compensation,&rdquo; he said, adding that performance-related pay is a guarantee of high-quality responsible banking.<br /><br />He argued that Goldman&rsquo;s compensation practices have only ever rewarded success, unlike some other banks which &ldquo;made no money and still paid large bonuses.&rdquo;<br /><br />Goldman is exempt from Barack Obama&rsquo;s cap on bonuses as it paid back the $10bn it was told to borrow from Washington&rsquo;s Troubled Asset Relief Program (Tarp). But Blankfein, the son of a postal worker, welcomed intervention in reforming the bonus system, saying that moves implemented so far are &ldquo;on the right track&rdquo; and that paying in deferred stocks is &ldquo;something we already do&rdquo;.<br /><strong><br />GOLDMAN SACHS THE BONUS ROW<br /></strong>Goldman Sachs reignited the furore over bankers&rsquo; bonuses last month when it revealed bumper third-quarter earnings of $3.2bn (&pound;2bn) and said that it had set aside $16.7bn for employee compensation in the first nine months of the year. That puts it on track to pay out $22bn at the end of the year, with the average UK employee set to earn in the region of &pound;450,000. <br /><br />Goldman last year received a $10bn loan from the US government&rsquo;s Troubled Asset Relief Program (Tarp), though it says it had no choice. It was also one of the largest of stricken insurer AIG&rsquo;s counterparties so was helped by its bailout.<br /><br />Critics have accused the bank of profiting from taxpayer bailouts while going back to &ldquo;business as usual&rdquo;. But Goldman, led by chief executive Lloyd Blankfein, argues that it has since repaid the Tarp loan, with 23 per cent interest, and that it was sufficiently hedged against the collapse of AIG to have been unaffected by its collapse and so didn&rsquo;t really benefit from the bailout.<br /><br />Goldman chief financial officer David Vinair has said that not paying bonuses of this size would be unfair to its staff, which have delivered the profits.<br />Third-quarter group income was $3.19bn, more than three times the amount a year earlier.