If Wall Street investment banks were judged by their public image rather than their share price, Goldman Sachs would likely be ranked somewhere between penny-stock companies and Bernard L. Madoff Investment Securities these days. The furor over year-end bonuses at Goldman and other firms whose profits rebounded last year cast a dark cloud. True, a New York Times story called it a "show of restraint" when Goldman announced that CEO Lloyd C. Blankfein would receive a mere $9 million (U.S.) worth of Goldman stock as his bonus. But I doubt that many people beyond Wall Street were mollified.
That's because Goldman is still suffering from its image as a profiteer-one that's too arrogant for its own good, and too close to decision makers in Washington, who saved its bacon during the 2008 market collapse. What makes this public image problem particularly difficult for Goldman is that it is largely true.
Obviously, there's not a lot that Goldman can do to make amends for the damage caused by its own traders, such as allegedly helping to push insurance giant AIG off a precipice. So here's some free public relations advice: Goldman needs to give, and in the biggest and most lavish way possible.
It can't be the normal "philanthropy" practised by banks and hedge funds in recent years, either. I use the quotation marks intentionally. Too much of the charitable giving by Wall Street firms has become a rather weak form of public relations. The primary goal, in many cases, is little more than to improve the social standing of top executives. So they give limited amounts to orchestras, ballet companies and private schools-worthy causes, but having little impact on the general public.
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Many hedge funds and Wall Street bankers also carve off slivers of their wealth for New York City's Robin Hood Foundation-a kind of local United Way supported by billionaires and overpaid yuppies. In return, they get a disproportionate amount of PR and, above all, status. The foundation spreads the money among local charities, but many donors are less motivated by altruism than by a desire to participate in its annual gala, one of New York's premier social events.
That's not philanthropy. That's tawdry social climbing. Goldman has to show that it is not a collection of mountebanks, but bankers who care about society-like the warm, generous bankers played by Jimmy Stewart in It's a Wonderful Life and Fredric March in The Best Years of Our Lives.
Goldman should ask itself: What would a 19th-century robber baron do in a situation like this? Today, the name Rockefeller is synonymous not with the pernicious tactics John D. Rockefeller used to build gargantuan Standard Oil but with public projects on a grand scale. Old John D. softened his image late in his life by giving away much of his personal fortune.
That largesse continued under his son, John D. Jr. In the 1920s, Junior leased the land in midtown Manhattan for what came to be known as Rockefeller Center. One goal was to build a new home for the Metropolitan Opera, but his partners on the project withdrew after the stock market crash in 1929. Junior pushed on alone to build a huge office complex, which provided much-needed jobs during the Depression. In the 1950s and 1960s, the third generation of Rockefellers were among the founding patrons of Lincoln Center, and they donated much more than just enough money to put their name on a fountain, or sponsor a season of operas. John D. Rockefeller III guided both the fundraising and construction.
Or Goldman could follow the example of Scottish-born steel magnate Andrew Carnegie. The founder of what became U.S. Steel, whose name was mud to millions of Americans because of his company's union busting, built more than 2,500 public libraries in the U.S., Canada and Great Britain, starting in the 1880s. The libraries soon became respected local institutions, though many people today don't know who the founder was.
The key is to have some impact on the lives of ordinary people. Goldman Sachs could adopt an entire depressed area-Niagara Falls, New York, perhaps, or the South Bronx or a poor section of Los Angeles. It could give a free computer to every impoverished person in North America. It could pour money into major public works projects in Gaza or Afghanistan. It could help rebuild Haiti. It could finance solar heating for every home north of the 45th parallel. It's a bit late now, but Goldman could have taken over the reconstruction of Ground Zero, right in its own backyard, when that project was stalled.
The PR payoff won't come immediately, and not everyone will buy it. The Carnegie name is still mud to this day in some union households, and the Rockefellers continue to generate conspiracy theories and animosity. But if Goldman Sachs can prove to enough people that its gifts are sincere, the attacks on the firm will cease drawing blood. The grand projects of the past were made by industrialists and their descendants who genuinely wanted to help others-some motivated by religion, like John D. Rockefeller, or, in the case of Carnegie (and his business ally, strikebreaking coke magnate Henry Clay Frick), a sense of guilt.
So far, there's no evidence that any of today's bankers care one whit about the public. And guilt? Fuhgeddaboudit.Report Typo/Error
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