666: Goldman's latest bonus bears the mark of the beast

Something strange is stirring. Even the young are joining the chorus of concern that this tarnished giant is part of a financial oligarchy that holds the US in its grip, writes Stephen Foley in New York

Something strange is afoot when Popbitch – provider of a weekly email beloved of students, stuffed full of celebrity tittle-tattle and links to the silliest miscellany of the web – breaks off from such glorious trivia to encourage readers to support GoldmanSachs666.com, a deadly serious website measuring the political tentacles of the mighty investment bank.

Something strange, too, when Simon Johnson, a former chief economist at the International Monetary Fund, becomes a hero of the internet and the satirical comedy-show circuit on cable TV, promoting his theory that the US is in the grip of a financial oligarchy.

The credit-market catastrophe that has plunged the world into recession is everywhere stirring new ways of thinking about how banking relates to the wider world, but nowhere more so than among a generation coming into political consciousness in these searing times. Something is brewing, some argue, that could make the "regulatory-financial complex" something to rail against in the same way that the military-industrial complex was in the Cold War.

And for all the impression it is giving that it has survived the credit crisis with its pre-eminent position on Wall Street intact, this should worry Goldman Sachs. More so than any other firm, it exists at the intersection of politics and high finance, and therefore has most to lose if this nascent movement turns it into the next ExxonMobil or Wal-Mart – firms whose every move could attract protest, and whose reputation could take years to repair.

"It was listening to the news coming out of AIG that got me fired up," says Mike Morgan, founder of GoldmanSachs666.com. "While politicians were screaming about $165m paid out to AIG executives in bonuses, $180bn was walking out the door."

Goldman, incidentally, has abandoned its attempts to shut the site down.

Mr Morgan is referring to the government bailout of AIG, whose collapse would have sent shockwaves through the markets. The Federal Reserve and the then-treasury secretary, Hank Paulson, decided to funnel public funds to AIG, and its counterparties were paid in full. You don't have to scratch far into the internet to find conspiracy theories: Mr Paulson was chief executive of Goldman before going into government; he appointed Edward Liddy, formerly of Goldman, to run AIG; Goldman was AIG's biggest counterparty, receiving $12.9bn from AIG after the bailout. (It says it was hedged and would not have lost even if AIG did go under.)

Mr Morgan is not the sort of young hot head you find protesting against the G8. He is a 53-year-old registered financial adviser from Florida, but he has attracted a handful of volunteers to beef up the website and to amass information on the Goldman alumni network and its power. "Goldman dipped into taxpayer funds via AIG," he says. "Who gets paid off 100 cents on the dollar these days? Only Goldman it seems. It is all about looking at the connections. Where do all the Goldman Sachs executives go? I see them as running the world. They are like the Standard Oil of the last century, too big and too powerful, with people flocking from Goldman to government and from government to Goldman."

It is a point that is being made forcibly by a growing number of people, from the lowliest bloggers to the most respected economists. Mr Johnson's claims of oligarchy are echoed by Nobel Prize winner Joseph Stiglitz, for example, and the notion is going mainstream. The New York Times devoted acres to a forensic investigation of Tim Geithner's diary from when the Treasury Secretary was running the New York Federal Reserve and appeared to have what it claimed were "unusually close ties with Wall Street executives", including those at Goldman Sachs and Citigroup, thanks to his mentor, Robert Rubin, a former treasury secretary who has been a senior figure at both banks.

Goldman has swung into action to try to arrest a public-relations nightmare in the making, and its chief executive, Lloyd Blankfein, knows precisely what is at stake. He has been most outspoken among Wall Street bosses in speeches and newspaper op-ed columns about Wall Street's need to change. At a speech to the Council of Institutional Investors last month, he said the disasters of the past year have been "humbling", and that pay practices on the Street look "self-serving and greedy in hindsight". He has argued that bonus practices should be changed, to reflect longer-term performance rather than one-year profits, which we all now know can be wiped away in future years. But reducing the psychological primacy of the bonus culture on Wall Street does not appear to be on his corporate agenda, and Goldman's first-quarter results revealed it was setting aside $4.7bn (£3.2bn) to pay salaries and bonuses for the quarter – 18 per cent more than in the same period a year ago, despite a 7 per cent fall in the number of staff.

"It is not about what you say, it is about what you do," says Anthony Johndrow, the managing director of the Reputation Institute, a New York consultancy. "Financial services firms cannot simply run a warm and fuzzy PR or ad campaign. The challenge is to find a way to make a statement and to address the trust that has been violated, to promise action that proves the company 'gets it'. The authentic enterprise takes responsibility for its actions and their impact."

Authenticity has become one of marketing's hottest concepts. Advertising executives insist that any message that does not reflect what a company really stands for is doomed to backfire. In the PR world, the "authentic enterprise" is one that understands how changing its image requires changing the fundamental way it does business. For Goldman, its reputation on Wall Street is that it is the smartest, best-connected and most lucrative place to be. Beyond Wall Street, is that enough to satisfy?

Mr Johndrow's Reputation Institute has just conducted research that suggests it is not – far from it. In its annual survey of the public reputation of 153 of the biggest companies in the US, released a few days ago, Goldman has plunged into the bottom six, in with oil companies and Dick Cheney's old oil-services firm, Halliburton. The survey gives a score based on public ratings of the trust and good feelings they have for each firm, and Goldman's rating fell 17 per cent. Only AIG's fell more.

Goldman Sachs's spokesman, Lucas van Praag, says: "We think our reputation is critically important, particularly in our hiring activities. The Reputation Institute survey is mainly focused on retail brands and we are not a retail firm. Although we were disappointed, we were not particularly surprised."

Mr Johndrow explains: "The world of Wall Street is a small world, and up to now it seems executives have considered that the reputations of the banks only really matter to a few people within that world. The reputation of Goldman Sachs versus, say, Credit Suisse, is the most important thing, and its regard for the general public as a stakeholder has been minimal. But now the public has a stake as taxpayers, yet the banks have not yet done anything to acknowledge what that means."

Reputation is an "intangible asset" whose diminution could have profound business consequences, he adds. Public fury can quickly be channelled through politicians into harsh new regulations and restrictions.

And it could, ultimately, hit Goldman's ability to attract the brightest graduates. As Mr Johndrow explains: "When you go back to your home town or your school, it stops being about how many expensive cigars and yachts and mansions you have. Justifying your job involves talking about its wider impact on society."

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
Joe Cocker performing on the Stravinski hall stage during the Montreux Jazz Festival, in Montreux, Switzerland in 2002
musicHe 'turned my song into an anthem', says former Beatle
News
Clarke Carlisle
sport
Sport
footballStoke City vs Chelsea match report
Arts and Entertainment
David Hasselhof in Peter Pan
theatreThe US stars who've taken to UK panto, from Hasselhoff to Hall
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Life and Style
Approaching sale shopping in a smart way means that you’ll get the most out of your money
life + styleSales shopping tips and tricks from the experts
News
newsIt was due to be auctioned off for charity
Life and Style
A still from a scene cut from The Interview showing North Korean leader Kim Jong-un's death.
tech
Environment
Sir David Attenborough
environment... as well as a plant and a spider
Voices
'That's the legal bit done. Now on to the ceremony!'
voicesThe fight for marriage equality isn't over yet, says Siobhan Fenton
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

The Jenrick Group: Night Shift Operations Manager

£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

SThree: Trainee Recruitment Consultant - LONDON

£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

SThree: Graduate Recruitment Consultant

£20000 - £25000 per annum + OTE £35000: SThree: SThree are a global FTSE 250 b...

Day In a Page

Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all
The week Hollywood got scared and had to grow up a bit

The week Hollywood got scared and had to grow up a bit

Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

Panto dames: before and after

From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
Thirties murder mystery novel is surprise runaway Christmas hit

Thirties murder mystery novel is surprise runaway Christmas hit

Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

Anne-Marie Huby: 'Charities deserve the best'

Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
The botanist who hunts for giant trees at Kew Gardens

The man who hunts giants

A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there
The 12 ways of Christmas: Spare a thought for those who will be working to keep others safe during the festive season

The 12 ways of Christmas

We speak to a dozen people who will be working to keep others safe, happy and healthy over the holidays
Birdwatching men have a lot in common with their feathered friends, new study shows

The male exhibits strange behaviour

A new study shows that birdwatching men have a lot in common with their feathered friends...
Diaries of Evelyn Waugh, Virginia Woolf and Noël Coward reveal how they coped with the December blues

Famous diaries: Christmas week in history

Noël Coward parties into the night, Alan Clark bemoans the cost of servants, Evelyn Waugh ponders his drinking…
From noble to narky, the fall of the open letter

From noble to narky, the fall of the open letter

The great tradition of St Paul and Zola reached its nadir with a hungry worker's rant to Russell Brand, says DJ Taylor
A Christmas ghost story by Alison Moore: A prodigal daughter has a breakthrough

A Christmas ghost story by Alison Moore

The story was published earlier this month in 'Poor Souls' Light: Seven Curious Tales'