For those concerned about how Goldman Sachs is set to bring in record-breaking profits while the broader economy remains downright stalled, there is one simple explanation: Goldman employees are just more productive than you.
In another comment that will likely provoke even more Goldman Sachs outrage, CEO Lloyd Blankfein appeared at a industry conference on Tuesday and defended his company's performance, reports the Financial Times. Blankfein's words come on the heels of his recent claim that Goldman Sachs is doing "God's work."
Here's the FT:
"I often hear references to higher compensation at Goldman," said Mr Blankfein. "What people fail to mention is that net income generated per head is a multiple of our peer average. The people of Goldman Sachs are among the most productive in the world."
Blankfein went on to say that Goldman's earnings are significantly higher than other financial companies in the Fortune 500, and that, per employee, his firm is far more profitable than companies even in other categories.
Leaving aside the small matter of the benefits Goldman Sachs received from the bailout -- and the advantages that it receives from being classified as a bank-holding company -- this statement is somewhat misleading.
For one, comparing Goldman Sachs to retail banking operations -- banks that actually, well, lend -- isn't quite a fair comparison. Not only do retail banks have, by necessity, far more employees than investment banks (Bank of America has over 281,000 employees, while Goldman Sachs has roughly 31,000), but traditional retail banking is also generally less profitable. This year, Goldman's earnings have been dominated by its trading activities.
Yet, as Bloomberg pointed out, Blankfein argued yesterday that Goldman shouldn't be confused with "too big to fail" banks. Here's Bloomberg:
"Our business is very complex, and I won't deny that, but it's far, far simpler than most of the competitors," Blankfein, 55, said today at a conference in New York sponsored by Bank of America Corp. "I wonder myself how some of these things get managed."
Blankfein seems to want it both ways. He wants to argue that Goldman Sachs is more profitable than other financial firms, but he also doesn't want to be compared to, well, other financial firms.
Whether he's boasting that his firm does "God's work," or simply touting the excellence of his employees, Blankfein still seems to be out of step with public sentiment. At the Business Insider, Henry Blodget's advice seems wise:
Just say, "We were fortunate enough to have had an extraordinary year. I am grateful to our employees, shareholders, and the U.S. government for helping us through one of the most challenging periods in the firm's history."