Collective Conscious

This hardly seems fair:

Do you remem­ber, back at the end of 2008, when Gold­man Sachs switched its sta­tus from invest­ment bank to com­mer­cial bank? This pro­vided it with var­i­ous ben­e­fits that allowed it to avoid immi­nent destruc­tion, and as long as they were doing it, the Gold­man part­ners decided to switch their fis­cal year from one that starts on Decem­ber 1 to one that starts on Jan­u­ary 1. Because of that, Decem­ber 2008 was part of no fis­cal year at all, and Gold­man clev­erly booked huge losses that month that never showed up on any of its annual reports.

But that’s not all. The New York Timesreported today on a vast trove of stock options that Gold­man granted recently to its part­ners, and guess when they were granted? Felix Salmon:

There’s much more to be said on this mat­ter. For one thing, the mon­ster option grant took place dur­ing Goldman’s noto­ri­ous orphan month, mean­ing that it would never appear in an annual report. And for another thing, it was very expen­sive even at the time.…Add it all up, and the var­i­ous stock-​​related grants given in one month of 2008 (we’re not includ­ing annual bonuses here) were worth $1.9 bil­lion at the time, and are worth some­where in the neigh­bor­hood of $7.6 bil­lion now.

Remem­ber that Decem­ber 2008, when Gold­man made these grants, was the worst month in the company’s his­tory: it lost $1.3 bil­lion, and was mired in the depths of the finan­cial cri­sis. Yet many part­ners will have received stock and options awards that month which are worth hefty eight-​​figure sums today. Not bad for a month’s work.

Ain’t life grand? It sure is if you work on Wall Street, where planet-​​annihilating finan­cial crises are a prob­lem only for the lit­tle people.

Issu­ing options like that is lit­er­ally print­ing money; they allow the already-​​rich folks over at Gold­man to use the com­pany as a per­sonal piggy bank, with­draw­ing Uncle Sam’s sup­port money directly with­out vio­lat­ing com­pen­sa­tion lim­its, etc.