Despite Foreclosures it has been a Good Year for Goldman Sachs

Despite the sluggish recovery and ongoing foreclosures it has been a good and profitable year for Goldman Sachs.

But at its headquarters in New York the mood was on a low key and little noise was being made about the fat pay cheques.

2009 had been a year of record breaking profits but the bank declared that it had laid aside $16.2 billion as incentives and bonus to its employees.

For someone not acquainted with the Walls Street world it would be hard to understand why 11 figures could dampen spirits. But Goldman and the like have other yardsticks. For them the figures are considerably restrained.

It has been rather surprising that the public outcry over bonuses given out in Walls Street reached the ears of those living in these lofty towers. Hitherto the practice with Goldman and for others in the industry had been to keep aside about half of its earnings as compensation.

For the last months of the previous year it deducted nearly $500 million from its scheduled compensation packet instead of adding to it. This was despite the fact that in the last quarter it had gained a whopping $4.95 billion – much above the anticipations of Walls Street.

Even then it has to be admitted that the employees of Goldman Sachs are paid much better than others. If this incentive was spread smoothly across its 32,500 employees then each would have pocketed $498,000. It is below the $700,000 that had been forecast few months previously. But the reality is that the top bras executives on top get much more proportionately. They earn much more with dollars running into millions as compared to the lesser fry.

But public anger and above all steps taken by Washington to trim the wings of Goldman edged on Goldman to take a more modest stand to deflect attention from its whopping profits and compensations. News about its bonus amounts was released on the same day that Obama suggested bringing in legislation to cap the scope and the size of the financial entities.

He accused the banks for nearly bringing down the entire financial system by taking “huge, reckless risks in pursuit of quick profits and massive bonuses.” The employees of Goldman accepted the inevitable without smiles. But some grumblings were heard. The bonus proportion was the lowest since the last decade when the company became public – 35.8%.

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