Goldman Sachs will continue encouraging employees to take positions in government, according to the bank’s annual letter to shareholders Thursday.
While space in the letter has usually been reserved for financial results and corporate responsibility initiatives, this year, CEO Lloyd Blankfein dedicated a half a page to defending the bank’s ties to the White House and Capitol Hill.
“The charge is that Goldman Sachs is able to extract certain advantages that others cannot. In fact, the opposite is true. Those in government bend over backward to avoid any perception of favoritism,” Blankfein wrote in the letter, which was paired with a group photo of Blankfein and his two new COOs—a position where Gary Cohn sat in years past. “That is why we will continue to encourage our people to contribute to government service if they are fortunate enough to be asked.”
That defense is certainly pertinent, given the criticism levied against Goldman regarding the stream of employees, both former and current, that have left Wall Street for the new White House. That list includes Goldman alumnus and Treasury Secretary Steven Mnuchin as well as Gary Cohn, now director of the National Economic Council. It’s perhaps no longer surprising when a former Goldman banker is hired to the federal government, with Jim Donovan named the deputy secretary of the Treasury Department just Tuesday.
At any rate, it seems as if Blankfein has no interest in mollifying his critics with his promise to encourage employees running for government. In fact, AFL-CIO has repeatedly criticized Wall Street banks including Goldman Sachs for what the trade union organization says is encouragement to join government, and potentially influence Wall Street regulation. Specifically, AFL-CIO has called out “government service golden parachutes,” compensation agreements that unlock unvested shares of an executive’s pay package if they take a government job voluntarily.
Cohn also benefitted from that compensation practice. The former Goldman employee was given expedited access to cash and stock payments previously tied to his future performance. That was worth $284 million, according to Bloomberg.
In years past, Goldman Sachs has tried to omit shareholder proposals from AFL-CIO calling for the Board of Directors to prohibit the pay practice.
Here’s is the segment of the Goldman letter in its entirety:
“Our Tradition of Leadership and Public Service
Gary was not the first person from Goldman Sachs to join the government, and we hope and expect that he will not be the last. Five of my most recent predecessors went into government service, and that has not been by happenstance. One ethic that has long pervaded Goldman Sachs is a commitment to public service if one is given the opportunity to serve. And that has been true over time and in many of the geographies in which we operate.
We recruit people who are oriented to the larger world, and their jobs require them to be both outwardly and inwardly facing. In the process, they develop the skills to make a contribution in large, complex organizations and the expertise to help drive economic progress and job creation.
We have been criticized for the fact that some of our colleagues, after long careers at the firm, have moved to work in the public sector. The charge is that Goldman Sachs is able to extract certain advantages that others cannot. In fact, the opposite is true. Those in government bend over backward to avoid any perception of favoritism.
We are proud of our tradition of leadership and public service and believe it is a core part of our culture. That is why we will continue to encourage our people to contribute to government service if they are fortunate enough to be asked.
We also have contributed our expertise and knowledge to broader public policy issues, such as fiscal policy. And, when certain issues impact our people, we have not hesitated to speak up on their behalf. In the past, we have commented on marriage equality, and more recently, immigration policy, because they both affect our ability to hire and retain people from the broadest pool of talent. We will continue to express our views on policies that affect our people, our business and the long-term interests of economic growth.”
