Just when you think you’ve seen just about everything there is to see in finance, along comes a new twist on an old ploy that takes your breath away with its cynicism.

In fact you can’t but help be very cynical about the news that Goldman Sachs (Wall Street’s highly profitable “vampire squid”) and Warren Buffett are going to rustle up half a billion bucks and lend it to small businesses.

What’s so odd about that idea? Well it’s going to be done through a charitable foundation, according to the news reports.

It was announced a day before President Obama’s Administration convenes a min-summit in Washington to look at ways of boosting lending to small business.

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The story has all the hallmarks of spin and a greasy attempt to divert attention from Goldman’s huge bonus payments to staff, a year after US taxpayers stabilised the US financial sector and saved the careers and reputations of all those geniuses at Goldman Sachs.

In fact Bloomberg pointed out that this wasn’t the first time that Goldman Sachs had done this when under pressure on huge payouts to staff. The report detailed several other occasions when charitable donations or ventures were revealed.

This morning, more of the same.

“Goldman Sachs Group Inc, under fire in Washington for setting aside billions of dollars for bonuses a year after getting a taxpayer bailout, said it’s teaming up with Warren Buffett to provide assistance to 10,000 small businesses in the U.S, ” Bloomberg reported.

“The $500 million charitable effort coincides with one of the Obama administration’s top economic priorities: spurring hiring at smaller companies. The initiative aims to provide assistance — ranging from counselling to obtaining funding — to 10,000 businesses. Buffett’s Berkshire Hathaway Inc is the largest shareholder in New York-based Goldman Sachs.”

To make it more appalling, the CNN website reported today that banks rescued and still receiving federal Government aid (Goldman isn’t one of them), had cut their lending to small business in the US by $US10 billion in the past few months.

“The 22 banks that got the most help from the Treasury’s bailout programs cut their small business loan balances by a collective $10.5 billion over the past six months, according to a government report released Monday.

“Three of the 22 banks make no small business loans at all. Of the remaining 19 banks, 15 have reduced their small business loan balance since April, when the Treasury department began requiring the biggest banks receiving Troubled Asset Relief Program (TARP) funding to report monthly on their small business lending.

“Over the six months that the reporting requirement has been in effect, the banks have cut their collective small business lending by 4%. Their cumulative balance stood at $258.7 billion as of Sept. 30, according to a Treasury Department report.”

So rather do what bankers usually do and lend money to businesses by taking a risk, Goldman Sachs is doing it through a Charitable foundation, with a song and dance routine. In fact you could argue that Goldman Sachs is effectively outsourcing its lending to small business to this charitable foundation (Is there a tax break in it for Goldman?).

Now that’s a first in banking.

As a Crikey subscriber and someone who began working as a journalist in 1957, I am passionate about the importance of independent media like Crikey. I met a lot of Australians from many walks of life during my career and did my best to share their stories honestly and fairly with their fellow citizens.

And I never forgot how important it is to hold politicians to account. Crikey does that – something that is more important now than ever before in Australia.

Liz
North Stradbroke Island, QLD

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