Goldman Has a $500 Million Army of Little Guys to Buff Its Image
(Bloomberg) -- No one would mistake them for typical Goldman Sachs clients. Marcus Moore runs a staffing firm. Jessica Johnson-Cope places security guards and rents out drug-sniffing dogs. J.R. Foster helps companies maintain their offices and buildings.
Yet just last week, those three and thousands of other small business owners descended on the Washington Hilton to celebrate America’s little guy -- and perhaps surprisingly, mighty Goldman Sachs Group Inc. too. The gathering capped a $500 million effort to burnish the bank’s reputation, on Main Street as well as in Washington, after the financial collapse of 2008.
It seems to be working -- at least judging by the crowd at the Hilton. For what amounts to less than 0.2 percent of its revenue over the past decade, Goldman has bought a lot of goodwill. The nine-year-long campaign underscores the myriad ways Wall Street has moved to influence public opinion -- and Washington policy -- since the dark days of the financial crisis.
“I know a lot of people say they want it for PR,” said Moore, the head of a Burbank, California-based search and payroll-services provider and a graduate of the program. “It’s not really my job to determine why you do what you do. I just care that as much good, or more good, is going to come from it than what we’ve had previously. Regardless of their rationale for doing it, they deserve some credit.”
Goldman Sachs used to settle for having its executives run the world. For decades, the firm’s alumni showed off an almost magical ability to end up in key posts -- leading central banks and the U.S. Treasury, sitting in Congress or crafting White House policy. The pattern, continuing into President Donald Trump’s administration, has earned it the nickname “Government Sachs.”
But in the wake of the crisis, Goldman learned such influence also has limits. As the public hunted for scapegoats, the firm quickly found it had little connection to the masses. After 150 years devoted to institutional clients and with no branch footprint, much of America didn’t know or didn’t trust the firm. A Rolling Stone essay portraying the investment bank as a “vampire squid” jamming its blood funnel into anything that smelled like money soon lodged itself firmly in the public’s imagination.
So in 2009, Goldman Sachs, facing blowback over the almost $17 billion it set aside for employee compensation, launched the 10,000 Small Businesses program. It pledged $300 million for financing to small firms through community lenders, and another $200 million for training and education. More than 6,700 entrepreneurs have since passed through the program.
It capped off that progress with last week’s event, which it called the largest-ever gathering of small business owners in the nation’s capital. It was an evangelical-like revival that showed the lengths the firm will go for positive publicity.
Travelers coming into Washington’s 110-year-old transit hub, Union Station, arrived to see a pop-up market featuring program alumni like McClure’s Pickles and Well Read Inc. in booths under a banner proclaiming Goldman Sachs’s small business credentials.
Graduates -- more than 2,200 in all -- congregated at one of Washington’s most storied hotels (known among locals as the Hinckley Hilton after John Hinckley Jr. shot Ronald Reagan there in 1981), with some paying $100 for rooms with a king-sized bed and a mini-fridge in a bank-reserved block that would have otherwise cost $389. Goldman negotiated discounts for at least three other hotels around town too. A soul band greeted attendees the first day, belting out tunes like James Brown’s “Living in America,” with the lyrics changed to “10KSB in America!”
Speakers at the Hilton included House Majority Leader Kevin McCarthy, Republican senators Tim Scott and Marco Rubio, Democratic Senator Chris Coons, Commerce Secretary Wilbur Ross, and business titans Tyler Perry, Richard Branson, Michael Bloomberg, and Warren Buffett. Buffett and Bloomberg, founder of Bloomberg News parent Bloomberg LP, are co-chairs on the program’s advisory council.
The next day, small business owners fanned out across Capitol Hill, visiting local representatives wearing light-and-dark-blue striped soccer scarves emblazoned with Goldman’s name.
“Red tape has been increasing, financing has been hard to come by -- these are all things that have gotten worse and worse in the country,” Goldman Chief Executive Officer Lloyd Blankfein said in an interview with Bloomberg Television at the summit. “You have to make things easier and better for small business people. Then the economy grows.”
The bank’s army found willing listeners. Alumni hail from more than 370 Congressional districts, all 50 states, the nation’s capital and Puerto Rico. State and federal officials, some of whom have recommended candidates for the program, attend locally held graduation ceremonies. Last week, the House Small Business Committee called a hearing to discuss Goldman Sachs’s small-business research.
Yet by some measures, the firm has a ways to go in turning public opinion. Goldman Sachs was the world’s 25th most valuable bank brand in 2017, according to Brand Finance, a London-based consultant. While that’s an improvement from a 28th-place ranking in 2013, it’s worse than its 7th-place ranking in 2010.
That doesn’t mean the firm considers it a failure. As Senator Scott stepped off the stage last week, John Rogers, a chief architect of the program as Goldman’s head of government and public affairs, was there to greet him in a corridor decorated with portraits of U.S. presidents and their wives. He flashed the lawmaker a wide grin, and a vigorous thumbs up.
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