Posted by DewRoc | Posted in Business | Posted on 23-03-2013-05-2008
By SUSANNE CRAIG And SCOTT PATTERSON
Goldman Sachs Group Inc.
said it is launching a $500 million small-business assistance program that includes an advisory panel with billionaire investor Warren Buffett.
The Wall Street firm made no connection in Tuesday’s announcement between the largest single charitable contribution in the firm’s history and public anger over its compensation. Goldman has earmarked $16.71 billion for compensation so far this year and repaid in June the $10 billion capital infusion it got from the U.S. government in 2008.
Tuesday, Goldman Sachs Chairman and Chief Executive Lloyd Blankfein apologized for his firm’s role in the credit crisis. “We participated in things that were clearly wrong and have reason to regret,” he said. “We apologize.”
The small-business program will make $250 million in charitable contributions, with $200 million aimed at investor education and $50 million for grants to support community-development financial institutions. The remaining $250 million will be invested in such institutions to help them provide financing to small businesses.
Goldman said the first financial institution to receive money from the firm will be Seedco Financial Services Inc., a nonprofit group in New York that specialized in loans in economically distressed and underserved communities. The first loans under the program will be made in early 2010, the company said.
The initiative, called 10,000 Small Businesses, is aimed at unlocking “the growth and job creation potential of 10,000 small businesses across the United States through greater access to business education, mentors and networks, and financial capital,” Goldman said in a statement.
The Obama administration has pointed to small businesses as a crucial source of job growth.
The board set to oversee Goldman’s push includes several financial heavyweights. Mr. Blankfein, Mr. Buffett and Michael Porter of Harvard Business School will serve as co-chairmen.
“Sometimes people lack basic business skills, like accounting,” said Mr. Buffett, who bought a major stake in Goldman last year. “This is a way to step on the accelerator a little bit. Maybe more than a little bit.”
The company’s conversion to a bank-holding company last year brought Goldman under stricter regulation, including compliance with the Community Reinvestment Act. The federal law encourages banks to meet the credit needs of all the communities in which they operate.
The new program wasn’t designed to fulfill Goldman’s CRA-related obligations but is likely to be looked upon favorably by the Federal Reserve, Goldman’s primary regulator, according to a person familiar with the matter.
Tuesday’s announcement was the second big charitable commitment made by Goldman this year. In October, the firm announced a $200 million contribution to the Goldman Sachs Foundation. In 2008, Goldman launched its 10,000 Women effort to provide women in emerging markets with a business education.