Goldman wants to make early repayment of Treasury aid
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On the same day that President Obama was outlining salary caps for financial companies that receive additional ‘exceptional’ federal assistance, Goldman Sachs Group was telling investors how much it would like to get out from under the government’s microscope.
Coincidence?
From Bloomberg News:
Goldman Sachs Group wants to repay the $10 billion it got from the U.S. Treasury last year to signal the firm is healthy and to escape limitations that were imposed with the money, Chief Financial Officer David Viniar said. ‘Operating our business without the government capital would be an easier thing to do,’ Viniar said at a conference hosted by Credit Suisse Group in Naples, Fla. ‘We’d be under less scrutiny and under less pressure.’ He added, ‘It would send a very good signal’ if the firm could repay the money. Under current rules, Goldman and other firms that received money under the Troubled Asset Relief Program, or TARP, are required to raise common or preferred equity to replace the government funds, Viniar said. The company, which received the government money in October, will consider raising money ‘if the markets are good,’ he said. ‘It’s not really restricting the way we do business but it was not meant to be permanent capital,’ Viniar said. ‘There are pretty minor, at this point, executive compensation restrictions and we’d like to get out from under those,’ he said.
Goldman wouldn’t be covered by Obama’s new executive salary caps, unless the firm was forced to go back to the Treasury for more aid.
Pay curbs that accompanied the first round of TARP money, including Goldman’s $10 billion, were modest, as Viniar noted. One restriction was a limitation on golden parachutes to senior executives.
But for an aggressive company like Goldman, any clamps on pay are going to chafe.
Viniar’s comments may have helped stoke Goldman’s stock on Wednesday. The shares jumped $5.16 to $87.97, their highest close since Jan. 6. For now, investors clearly see Goldman coming out of the credit mess a winner -- and free of heavy government control.
By contrast, shares of Bank of America Corp., which Wall Street seems to be regarding as already nationalized because of the huge new federal aid package the company got last month, fell 60 cents to $4.70, an 18-year closing low.
-- Tom Petruno