Goldman staff have the last laugh on bonuses

» Goldman staff have the last laugh on bonuses

They’ve called it the $30bn speech – that’s the value wiped off shares in top US companies in the minutes after President Obama announced on Thursday that he was to introduce measures to reduce the size of financial institutions and limit their ability to take on risk.

Almost without exception, big bank shares headed south on the news, with stock in Goldman falling some 8% Thursday and Friday. But Goldman staff are doubtless delighted at the effect Obama’s statement had on the firm’s shares, as the award price used for calculating the number of shares that go into individual bonus packages (as deferred equity) is thought to have been based on Friday’s close. In other words, thanks to the President’s obsession with bankers and their bonuses, Goldman staff will actually receive around 8% more stock in their bonus sacks than they would have before he opened his mouth. Such is The Law of Unintended Consequences.

It seems too neat to be true – which probably means that it isn’t. It’s a sign of our obsession with Goldman that a speech which implies the end of its business model, has its stock fall significantly and put its very future in doubt is seen as being in its favour.

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