When the Vampire Squid met The Nuns

Goldman Sachs is trying to put the financial crisis behind it, but its critics won't leave it alone. Sean Farrell reports

The Great Vampire Squid was forced to face the people yesterday as Goldman Sachs held its widely anticipated annual general meeting. Wall Street's most powerful investment bank hosted shareholders at its building in Jersey City for the first time as it sought to head off anger about the fortunes it pays its top people and its role in the financial crisis.

The bank has dealt with these questions before, but this year's meeting promised to be particularly tricky. The meeting was the first time Goldman's embattled chief executive and chairman, Lloyd Blankfein, had faced shareholders since the bank agreed to pay $550m to settle civil fraud charges laid by the Securities and Exchange Commission after Goldman sold to its clients mortgage bonds that were created by a hedge fund betting against the housing market.

Mr Blankfein and his colleagues have also been accused of misleading Congress after being hauled in front of the legislature. A US Senate report on the financial crisis gave Goldman a chapter of its own and said the bank had misled clients. The firm denies the charges.

A host of activist religious investors, including a group of nuns, turned up to the AGM under the banner of the Interfaith Centre on Corporate Responsibility to protest against the way Goldman rewards its bankers. The bank's top five executives were awarded almost $70m in total for 2010, including $19m for Mr Blankfein. Major shareholder groups have accused the bank's pay plan of being "opaque", with pay disconnected from its financial performance.

Sister Nora Nash, the corporate responsibility director for the Sisters of St Francis of Philadelphia, caused discomfort by pointing out: "Execs have amassed untold wealth while a billion people suffer from poverty and food insecurity."

Sister Nora's resolution requiring Goldman's board to judge whether pay was "excessive" got about 4 per cent of the vote. But the bank's own resolution on how to pay its executives secured only 73 per cent of votes.

Father Seamus Finn, who attended with other ICCR representatives, said: "We hope they will take a second look at that [pay plan] because these votes usually get much higher support."

So what is it about Goldman – famously dubbed "a great vampire squid wrapped around the face of humanity" by Rolling Stone magazine – that attracts so much ire? Well, there's the money and then there's the influence – the bank was a major contributor to President Barack Obama's 2008 election campaign and has a number of alumni in prominent positions in the administration.

Professor Geoffrey Wood, of Cass Business School, says the bank is to some extent a victim of its success. "One of the reasons Goldman Sachs is getting criticism from Congress is that they are well connected and people suspect they get a benefit from that. But they are well connected because they hire bright people and have a very good employee selection policy."

Father Finn says: "They are a big player on Wall Street and are also a big player in terms of the health and stability of the financial system. They are influential for a number of reasons including their size and the number of their people who go into the government."

Last year, in response to the SEC's investigation, Mr Blankfein announced a business standards committee to study the firm's practices and ways it could improve. Mr Blankfein – or "Lord Goldmine" as one 81-year-old shareholder calls him – conceded yesterday that not all sections of the firm acted in a way that was "of the highest order" during the crisis.

Father Finn says Goldman has met ICCR three times in the past year and has listened to its views. He says the standards committee is a step forward but he wants the bank to be more open about political contributions it makes through trade associations and to reform its pay practices. "That would go a long way to getting them a better reputation," he says.

Professor Wood says the problem with Goldman runs to the heart of how the financial system is organised so that investment banks operate an oligopoly that gives them a virtual licence to print money. "The root of all these complaints is the lack of competition in investment banking. The only way to create easy entry to the market is to create easy exit, and we have to get to grips with this."

He says the chaos after the bankruptcy of Lehman Brothers showed that investment banks could not be allowed to fail. And if a company could not fail that stopped competitors coming in. "If you enter an industry, one of the obvious things you want is for existing firms to get into difficulty so you can take their business, but there is no way of disrupting them without causing disruption in financial markets."

All in all, yesterday could have been worse. Moving the event from Manhattan seemed to pay off. The meeting was predicted to be particularly uncomfortable for Goldman's bosses but fewer small shareholders made the journey this year. There were also fewer calls for Mr Blankfein to quit than last year, but he faced questions about his own desire to stay in the job after speculation that he had had enough.

"That's all made up," Mr Blankfein told a shareholder. But there was a hint of war weariness: "We are mindful of the stresses and strain that led to the financial crisis and have no desire to go back to that place."

Responding to a shareholder, who said a former Goldman partner described the firm as "a disgusting place", Mr Blankfein responded: "Not everybody will be happy all the time. We do our best."

Start your day with The Independent, sign up for daily news emails
Voices
There will be a chance to bid for a rare example of the SAS Diary, collated by a former member of the regiment in the aftermath of World War II but only published – in a limited run of just 5,000 – in 2011
charity appealTime is running out to secure your favourite lot as our auction closes at 2pm today
News
Elton John and David Furnish exchange marriage vows
peopleSinger posts pictures of nuptials throughout the day
News
File: James Woods attends the 52nd New York Film Festival at Walter Reade Theater on September 27, 2014
peopleActor was tweeting in wake of NYPD police shooting
Sport
Martin Skrtel heads in the dramatic equaliser
SPORTLiverpool vs Arsenal match report: Bandaged Martin Skrtel heads home in the 97th-minute
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
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

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...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £35K - £45K: SThree: SThree Group have been we...

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'