Blankfein’s Sorry Apology

Lloyd Blankfein is CEO of investment bank Goldman Sachs – and last Tuesday he did what few other CEOs in the banking and financial industry have even contemplated doing. He apologized for … what did he apologize for?

““We participated in things that were clearly wrong and have reason to regret,” “We apologize.” – NYTimes

“We’re a leader in our industry and we participated in things that were clearly wrong and we have reasons to regret and apologize for.” – PBS Nightly Business Report

Thats all you get. I cannot find transcripts of the full set of remarks. If you go to the Goldman Sachs site you will not find any transcript [not a good sign given the importance of the remarks by the company’s CEO. This raises questions about the remarks credibility/adherence within Goldman itself. See below]. The words were spoken at  the Directorship Magazine Conference which does  have a 60 minute interview with Lloyd Blankfein available here; but there are no words of apology in this rambling  interview.

So lets contrast this apology with the recent one made by Australian PM Kevin Rudd for the Forgotten Generation’s years of abuse and pain suffered as orphans and children sent to Australia from Britain, often without the knowledge of their parents. Kevin Rudd’s apology is available as a video broadcast here. What is immediately apparent in this apology:
1)it is public – made available to the world as this video;
2)it is direct to those affected – the speech was made to  over 900 of the Forgotten Generation;
3)it is specific – PM Rudd , point by point, directly addresses the many areas where the Australian government failed to meet the needs of nearly 500,000 Australians some 7000 of which were children sent by force from Britain;
4)it is unanimous – the leader of the opposition party, Malcolm Turnbull, is present and adds his assent and remarks to the apology;
5)it suggests actions and remedies – given the huge numbers in the generation  the issue of compensation is still subject to debate. Likewise the controls on having the situation repeated again are in debate. Currently they are much more moral then actual legislation.

Contrast this with the apology made by Goldman Sachs’ Blankfein.
1)it is barely public – there is no public record of the exact words of the apology;
2)it is indirect at best – the Directorship Magazine Conference was an exclusive audience;
3)it is terse and vague – all the public knows is that Blankfein acknowledges that “we participated in things that were clearly wrong”;
4)it is uncertain as to whether the Board and other top officers at Goldman Sach’s concur and so in question too is whether the organization’s behavior will change;
5)it leaves completely in the dark what Goldman and/or Mr. Blankfein believes should be done to prevent this “regrettable” behavior in the future.
This latter fact is very important given that the Financial community is pushing back hard on federal government legislation to a)set limits to Financial compensation as that has been one of the major factors leading to highly risky Financing practices which produced the subsequent near total collapse of the World Financial system; b) on regulatory reforms that would require more strict capitalizations requirements; and c)more transparency and reporting on the $20trillion Derivatives markets that work in a world of secrecy and such deep darkness that even today i)people don’t know the full extent of US financial institutions exposure and ii)still can’t predict when US finacial markets and banks will return to
So on these measures, CEO Lloyd Blankfein’s apology appears quite sorry in comparison to Australian PM Kevin Rudd’s. And don’t be fooled, these are very similar situations – at least hundreds of thousands of nameless victims [for both situations are travesties against the Commons]. In the case of Goldman, hundreds of millions world-wide made worse off by Goldman Sachs and other financial institutions setting up a Ponzi scheme in which the general public has to pay $trillions to insure that financial institutions “too big to fail” don’t. Likewise in Australia it is estimated that nearly 500,000 Australians and their families of the Forgotten Generation have had to live with economic, social , and educational hardship if not direct abuse. A nameless Common group of people were treated as less than equal in both situations. The Australians still have the issues of compensation and control of the situation; while Americans are still not sure what exactly “was clearly wrong” in Goldman’s behavior. If Robert Reich is right it was not the high risk taking behaviour because Goldman Sach’s is back into high stakes financial games again.

Why Apologize?
Why should Blankfein apologize – when it is such a limited, sorry apology? Perhaps as the most profitable “bank” coming out of the Financial Downturn, Blankfein felt he should speak[once and for all??] for the financial community. Others have suggested that the apology and the same day announcement of $100 million/year for 5 years grants to Small Businesses is a PR salve and a marketing strategy. It is PR salve because Goldman Sachs is under fire for increasing its bonus compensation by 40%++ this year while unemployment reaches 10.2%. Others suggest that some of the “underhanded” dealings during the financial crisis have to be dispensed with. Still others say it is part of a marketing campaign to get the best and the brightest new small business entrepreneurs on their side as Goldman seeks to dispel the image of being “elite financial pirates”. Given the calculated nature of the organization and its chairman, I would venture to say this is an apology they are determined not to be sorry for.