Goldman Sachs CEO Defends Executive Pay Lloyd Blankfein says that because the New York company receives taxpayers' money, it is extra careful in how it spends it. "It certainly affects our behavior," he says. Blankfein also tells NPR that executive pay would never be as high today as it was two years ago.

Goldman Sachs CEO Defends Executive Pay

Goldman Sachs CEO Defends Executive Pay

  • Download
  • <iframe src="" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript

Goldman Sachs CEO Lloyd Blankfein was addressing the Council of Institutional Investors' conference in Washington, D.C., on Tuesday when he was interrupted at the podium by two women holding up a pink banner that read: "We want our money back."

The protesters were referring to the billions of federal dollars Goldman Sachs and other Wall Street companies have received under the Troubled Asset Relief Program.

Blankfein handled that interruption with confidence befitting the head of a company that has produced two recent Treasury secretaries: Democrat Robert Rubin and Republican Henry Paulson. Blankfein also handled it with the confidence of a man who is now extremely wealthy, but who grew up the son of a postal clerk in a Brooklyn, N.Y., public housing project.

"I was interesting to the conferees because I'm chairman and CEO of Goldman Sachs; but I'm also a taxpayer and I'm also a citizen, so I share some of those feelings as well," Blankfein tells NPR's Robert Siegel. "I will tell you precisely when Goldman Sachs gives its money back: As soon as we are able to, while still being able to perform our functions in the capital markets systems subject to the approval of our regulators."

Blankfein says that because of legal restrictions, he can't discuss the approval process. But generically speaking, he says the TARP money was never meant to be "permanent capital."

"It wasn't the option of the bank to hold on to it, but rather the obligation of the bank that as soon as it was able to do it, to return the money while still performing that important purpose of intermediating and lending," Blankfein says. "Then the obligation was to return it immediately."

Blankfein acknowledges that people are rankled by Goldman Sachs' compensation structure. But he says there is a price for talent.

"I'll accept the premise that the numbers, in the benefit of hindsight of course, look much too high, because today they'd never be those numbers," Blankfein says. "Because today, people aren't creating that kind of value. So it's almost a foreign thought that we ever could have been in that world.

"But let me transport you back to 2005, 2006: In those years, Goldman Sachs actually had issues retaining our talent," he says. "I think it's kind of well-known that a lot of people who created equity firms and hedge funds were people who were alumni of our firm. They weren't alumni who necessarily ran through their whole careers and retired from Goldman Sachs. They were people who, in the prime of their careers, when they were still creating enormous value for the shareholders of Goldman Sachs, decided they had more lucrative alternatives outside of the firm."

Because Goldman Sachs is now receiving money from the federal government, Blankfein says, the compensation issue is on the "forefront" of the executives' minds.

"And since money is fungible, we're very, very careful how we spend the money and how it appears that we're spending the money," Blankfein says. "It certainly affects our behavior, and you know something — it should affect our behavior."

The notion of bankers playing a round of golf in the afternoon while at a conference has changed, he says.

"There's kind of a new atmosphere in the world. Things don't look the same," Blankfein says. "If we were not in the TARP today, I think the round of golf still feels a little bit different than it would have felt two years ago. And by the way, there's a business purpose for the round of golf; it's not as if people within Goldman Sachs are playing with each other when they should be laboring at their desks. We're engaging with our clients in a context in which people can be more friendly, share more information, become closer — all with a commercial purpose, which is in the best interest of our shareholders. There was nothing wrong with it then, but it does have a different feel in the context of so much distress."