The NYT discussed the prospects for the 2009 bonus for Goldman Sachs CEO Loyd Blankfein, which it reports could be as high as $100 million. The article notes anger over the huge bonuses at bailed out institutions, but then tells readers that Goldman paid back the money "with interest." It would have also been worth informing readers that the interest paid by Goldman was far below the market interest rate at the time of the crisis. We know this because Warren Buffet contracted to lend money to Goldman at the the same time as it received TARP money and charged more than twice the interest rate as the government. In addition, Goldman was allowed to borrow more than $20 billion with a guarantee from the FDIC. This guarantee saved Goldman several billion dollars in interest costs. Goldman likely also borrowed billions of dollars at below market interest rates from the Federal Reserve Board's special lending facilities, although we don't know this for certain because Federal Reserve Board Chairman Ben Bernanke refuses to tell the public to whom he lent our money and under what terms. Goldman was also handed almost $13 billion from the government through AIG, that it would not have received if the government had allowed AIG to go bankrupt. Goldman is not repaying this money. Getting money at below market interest rates is a gift, just like getting anything else at below market price is a gift. If the NYT felt the need to give us additional background about Goldman repaying its bailout money (with interest) in the context of a discussion of Mr. Blankfein's bonus, it should have also informed readers that the interest it paid was far below market rates.
--Dean Baker
