Skin the Cat

Goldman Sachs is now making loans to its cash-strapped employees. See: Goldman Loans. This, most likely, is in response to the public outrage that has arisen over the bonuses that AIG recently gave to many of its managers. Like AIG, Goldman was also a recipient of taxpayer largess to the tune of $10 billion of TARP funds last fall PLUS a $12.9 billion pass-through of taxpayer funds from AIG (which I wrote about in my previous blog post). This loan program pretty much substitutes for what would be standard bonuses at Goldman. Instead, it is loaning its employees the money necessary to meet their internal capital calls.

Now the rub … I would be willing to bet a good steak dinner that many of these “loans” will be eventually forgiven by Goldman. Thus they effectively will turn out to be retroactive bonuses without the pejorative label. (And this legerdemain also allows recipients to defer income taxes on these payments.) So you see … there is more than one way to skin a taxpayer.