Wall Street investment firm Goldman Sachs received $10 million dollars in government money as part of its efforts to help troubled firms recover from last year's critical financial crisis but has since boasted about $12 million dollars in profits.
This question of how they are using government money has prompted criticism from across the political spectrum.
As part of NewsHour correspondent Paul Solman's reports on Making Sense of financial news, he examines how the Goldman Sachs makes its money and the government's role in the company's success.
In this video, Paul Solman talks to economists and Wall Street insiders about how Goldman Sachs turned itself into a company that owns banks, giving them access to cheap federal funding.
Quotes
"Let me see if I have got this straight. The only people who have fully recovered from the financial meltdown are the ones who caused the financial meltdown." - "Daily Show" host John Stewart
"The entire system was teetering on the brink. When you have a tidal wave coming, it doesn't discriminate between the sinners and the winners. It's going to drown us all. When we bailed the system out, we saved Main Street, as well as Wall Street. We didn't just save Goldman Sachs." - Jeff Macke, former hedge fund owner
"[Goldman Sachs is] not too big to fail. They're too good to fail. Wilt Chamberlain said it best when he said, nobody roots for Goliath.
Everyone is out to get Goldman Sachs because they're the best, they make money, and they survive in this environment, when other people aren't." - Jeff Macke
Warm Up Questions
1. What is Wall Street? How are you affected by what happens on Wall Street?
2. What happened to the economy in the past year? What caused the financial crisis?
3. Where does government money come from?
Discussion Questions
1. Goldman Sachs' CEO Lloyd Blankfein says the bank didn't need the money it got through the TARP bailout. Others say they needed it, otherwise they would not have been going to the Federal Reserve on a Sunday night asking to become a bank holding company. Which story do you believe?
2. Why did Goldman Sachs want to become a bank or bank holding company instead of just an investment bank?
3. Investment advisor Jeff Macke says it was okay -- since it's not illegal. He says if the Fed doesn't want them to do that, they should raise interest rates or pass new laws. As long as there is a legal way to make money, people are going to do it. What do you think?
4. Macke said that when the government saved the financial markets they saved both the sinners and the winners. What do you think he meant?
5. On Goldman Sachs' record profits, Jon Stewart commented that it seems the only people who have recovered from the financial meltdown are the people who caused the financial meltdown. What did he mean?
Additional Resources
