Goldman Sachs Shook Tens of Billions Out of Tax-Payers -- Now They're Whining All the Way to the Bank

Lloyd Blankfein, the CEO of Goldman Sachs, is very upset with the Troubled Asset Relief Program (TARP). Last fall, Mr. Blankfein borrowed $10 billion through the TARP at below market interest rates. Now, the government is starting to tie some real conditions to this money, for example, by limiting what Goldman can pay its executives. Mr. Blankfein argues that such conditions are making it impossible to run his business and is now anxious to return the TARP money.

It is great to see that Goldman is finally prepared to go forward into the market without its government training wheels of TARP aid, but, unfortunately, Mr. Blankfein isn't yet confident enough in his business acumen to actually forego government assistance. Goldman Sachs has benefited and continues to benefit enormously from other forms of government aid.

For example, last fall Mr. Blankfein also took advantage of the opportunity to borrow $25 billion with an FDIC guarantee to his creditors. If this government guarantee reduced his borrowing costs by two percentage points, then it means that the taxpayers handed Goldman $500 million a year in lower interest costs.

Goldman Sachs also has the opportunity to borrow at several of the Federal Reserve Board's special lending facilities at below market interest rates. We don't know how much taxpayers have given Mr. Blankfein through this channel because the Fed won't tell us. Fed Chairman Ben Bernanke's position is that when the Fed gives out money, the taxpayers just get to write the checks; taxpayers don't get to know where they went.

Mr. Blankfein also got a big wad of taxpayer money from the A.I.G. bailout. It was the biggest single beneficiary of the government's largess, pocketing more than $12 billion. If matters had been left to the market and A.I.G. had gone under, Goldman Sachs likely would have gotten almost none of the money that A.I.G. owed it.

In short, Mr. Blankfein is not at all prepared to go out on his own in the rough and tumble of the market; he just doesn't like government programs that come with conditions, like the TARP. He would much rather get his government money with no strings attached. And, since there are channels through which Goldman can get government money without any strings, it is perfectly understandable that Mr. Blankfein would opt out of a program with strings.

In this sense, Mr. Blankfein's attitude might be comparable to a mother receiving Temporary Assistance for Needy Families (TANF). To receive their benefits of roughly $500 per month, mothers must meet a variety of work and other requirements and endure lectures on the virtues of being married.

Undoubtedly, many mothers find these TANF requirements to be quite annoying. However, unlike Mr. Blankfein, most of the mothers receiving TANF do not have friends in high prices in the administration and Congress. As a result, the mothers receiving TANF will just have to live with the conditions the government imposes on their behavior.

Mr. Blankfein's whining is reminiscent of the resignation letter of Jack DeSantis, an A.I.G. executive who resigned in response to the public outcry over the huge A.I.G. bonuses. In this letter, which was reprinted in The New York Times, Mr. DeSantis complained that he worked 60- to 70-hour weeks to help in the unwinding of A.I.G. Of course, unlike the vast majority of people who put in long weeks, who earn less than $100,000 a year, Mr. DeSantis felt entitled to a salary of close to $1 million a year.

Furthermore, Mr. DeSantis apparently had a poor understanding of contract law. As a bankrupt company, A.I.G. could not make binding commitments for future payments -- it didn't have the money. At the insistence of the government, hundreds of thousands of autoworkers are now faced with the loss of the retiree health benefits for which they worked decades. Mr. DeSantis thinks that he is deserving of sympathy because the public is angry over his $750,000 bonus.