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Goldman Sachs Group, stung by criticism over executive bonuses and actions that helped trigger last year’s economic near-collapse, said Tuesday that it would join other groups and Omaha financier Warren Buffett in a national five-year, $500 million program to help small businesses in low-income areas.
The New York City financial company said its “10,000 Small Businesses Initiative” would send volunteer staff members out to teach business skills to small-business owners. The program also will provide scholarships, capital and support services to remove “barriers to growth” for the small businesses.
Buffett is chairman and CEO of Berkshire Hathaway Inc., the largest shareholder of Goldman Sachs. The program would operate through the nonprofit Initiative for a Competitive Inner City and community colleges to “unlock the growth and job-creation potential” of small businesses nationwide, Goldman said in a press release.
Goldman, which has been under fire for authorizing billions in executive bonuses a year after getting a taxpayer bailout, said it has been developing the program for nearly a year.
Goldman also operates 10,000 Women, which helps women entrepreneurs in developing countries, and a large charitable foundation.
Bloomberg News reported that Goldman, the most profitable securities firm in Wall Street history, is trying to dispel criticism from lawmakers and pundits who portray the company as the greedy face of a financial industry whose excessive risk-taking fueled the credit crisis.
The company recently allocated $16.7 billion for compensation and benefits, enough to pay each of its employees $527,192 for nine months’ work.
At a press conference Tuesday, Lloyd C. Blankfein, Goldman’s chairman and CEO, said the company contributed to the financial crisis, but he didn’t list specifics.
“We participated in things that were clearly wrong and we have reason to regret, and we apologize for them,” he said.
He said the firm decided to respond to the criticisms by finding solutions to problems facing the industry and the country.
“What are we going to do to fulfill our commitment and our obligation to the world to be good allocators of capital and make sure we’re doing the right thing, making sure we’re helping the country pull out of recession, grow businesses that help generate jobs?” Blankfein asked.
In the press release, Buffett said economic recovery “is dependent on hard-working small business owners across America who will create the jobs that America needs. I’m proud to be a part of this innovative program, which provides greater access to know-how and capital — two ingredients critical to success.”
Blankfein said small businesses play a vital role in creating jobs and in creating economic growth.
The program’s features include:
Ÿ $200 million in scholarships to small business owners and funds to assist community colleges, universities and other institutions.
Ÿ $300 million in loans and philanthropic support through Community Development Financial Institutions, a program established by Congress in 1994 to provide capital in low-income communities. The money would help small businesses grow in those areas, providing technical assistance and guiding them to other sources of capital.
Ÿ A network of Goldman staff members and other local and national business groups to mentor small business owners.
Ÿ An advisory council, led by Blankfein, Buffett and Michael Porter of Harvard Business School, to help develop, execute and evaluate the program. Other council members include more than a dozen business and academic leaders and former U.S. Education Secretary Margaret Spellings.
Michael Porter, founder of the Initiative for a Competitive Inner City, said the program “will meet a vital need in disadvantaged communities, which is to provide the training, tools, and relationships to help local entrepreneurs and their businesses grow and create a self-reinforcing cycle of economic opportunity.”
Goldman said the first community college in the program will be LaGuardia Community College in Queens, N.Y., starting with classes next spring. Seedco Financial Services Inc. of New York City will receive financing from Goldman, and will make loans available to businesses in New York City starting early next year.
This report includes material from Bloomberg News.
Contact the writer:
444-1080, steve.jordon@owh.com
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