Diet for fat-cat bankers an illusion

As another year of jobs lost, homes foreclosed and budgets cut draws to a close in America, some of Wall Street heftiest fat cats are tipping the scales with their bonuses -- and pocketing your tax dollars at the same time.

Sound unbelievable? Sadly, it's true, according to BusinessWeek. A recent article from this financial magazine details how one powerhouse bank has taken steps to trim lavish compensation for top execs in response to a public outcry.

On the surface, many of the moves undertaken by investment banking behemoth Goldman Sachs look respectable, but a bit more digging reveals some ulterior motives at play. While Goldman repaid the money it took from Uncle Sam as part of the TARP program, many taxpayers are still angry that the government's taxpayer-funded bailout of AIG indirectly benefited Goldman, who had billions invested in complicated trading deals with the troubled insurer.

Goldman's CEO said in a statement quoted by BusinessWeek that the bank's compensation changes are good for the public and good for shareholders, but you should take this assurance with a grain of salt.

For instance, the article points out that the firm will give its top executives bonuses in stock that must be held for five years rather than in cash. Sounds solid, right? As it turns out, it's also good for the bank.

Since the bankers won't be able to sell many of their shares for five years, the bank's accounting department won't have to count it as payment until five years from now, which boosts their bottom line in the near term. And although the bankers receiving these shares could lose money if the stock price drops between now and five years down the road, there's also the fact that they could get even richer if those shares are worth more by the time they get to cash them in.

Another trick BusinessWeek blows the whistle on is the way Goldman is measuring its pay-per-employee. Recently, it began including temporary workers and consultants in its head count, which boosted its worker number by more than 3,000. Since temps and consultants are generally paid less than their on-staff counterparts, this effectively lowers the bank's per-employee pay without their having to change anything.

This isn't the only recent example of Goldman Sachs living large at taxpayers' expense. When 6,000 of the company's employees move to a shiny, new office tower in lower Manhattan next year, they'll be working in a building financed partially with public funds. After 9/11, the government was afraid businesses would never return to that neighborhood, so they threw breaks, perks and grants at anyone willing to stay on the site of the terrorist attack.

According to this article in Bloomberg, Goldman was allowed to sell $1 billion -- later raised to $1.65 billion in tax-free bonds to finance construction just because they were willing to build close to the World Trade Center site. This saved the company $175 million, according to the article.

Goldman also got $66 million in other benefits, according to the article. Does that sound like a lot? It doesn't end there. The company also gets $49 million in various grants, tax breaks and discounts in connection with the new building.

According to a Bloomberg estimate, Goldman Sachs is on track to earn $11.6 billion this year. Readers, what do you think? Should the company have to make more of an effort to rein in its executives' compensation, given the millions it gets at taxpayers' expense?
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