According to the FT, The agreement with Goldman states that if CIT defaults or goes bankrupt, it “would be required to pay a make-whole amount” that totals $1bn.”
The news raises the question once again whether Goldman is luckier than almost all of its competitors or just better run. The answer is almost certainly the latter. Goldman made it through the credit crisis nearly unscathed. Profits for the firm’s current fiscal year should be at a record high and so should the compensation of its employees, especially its already-wealthy managing directors. The market has appreciated Goldman’s performance, pushing its shares up 120% this year, far outpacing other bank and brokerage stocks.
The public and Congress have been critical of Goldman’s pay packages. They do look excessive during a period when the credit crisis is not yet a year old. But, the government should welcome such problems. Goldman is one of the few financial firms that has not required huge sums of government money and constant attention. Paying its management well is a sign that taxpayer money was never at risk when it went into the Goldman treasury.
Douglas A. McIntyre
Top Gaining Stocks
Top Losing Stocks