I am writing on behalf of the 2.2 million child care providers, home care workers, janitors, public employees, and other members of the Service Employees International Union (SEIU) to request that Goldman Sachs take immediate action to help in our country's economic recovery.
We are almost two years into the worst economic crisis since the Great Depression. Nearly half of all households have experienced a decline in income--either through job loss, reduced hours, or cuts in pay; more than one in seven mortgages are delinquent or in foreclosure; and states have faced revenue shortfalls of $190 billion so far this year. And projections for next year say that it will only get worse.
Big banks and Wall Street firms like Goldman Sachs played a major role in the creation of this crisis. Despite receiving subsidies and guarantees of almost $64 billion from American taxpayers1, Goldman has refused to make sufficient efforts to get our economy moving again. Instead, Goldman is on pace to set aside a record breaking $22.3 billion for compensation and bonuses, based on "profits" that are largely subsidized by American taxpayers.
Goldman Sachs board members will no doubt gather in the coming weeks to review year end profits and finalize decisions about projected bonuses. It is clear to many that Goldman's profits are based on returning to the same old business practices that crashed the economy--but the full extent has not been measured. We believe that given the massive public investment taxpayers have made in the firm, Goldman Sachs must make the following information available to the American people:
1. The impact Goldman Sachs' investment strategies have had on jobs and workers.
Goldman Sachs is a major owner of thousands of companies through its private equity arm and investment vehicles. Goldman and other owner/shareholders may have benefitted substantially from decisions made at companies that have hurt working families, decisions like closing factories, paying poverty level wages, laying off workers and refusing to provide health insurance.
For instance, with 10.33% of the shares, Goldman Sachs is by far the largest owner of low wage employer Burger King. Burger King fast food workers earn a median wage of $6.93/hour with limited or no health benefits. Burger King employees are heavy users of publicly-funded health insurance programs such as Medicaid and SCHIP in several states including Alabama, Connecticut, Florida, Georgia, Massachusetts, Ohio, Oregon and Utah. In Ohio alone, Burger King cost state and federal taxpayers $13.3 million in 2007 in the form of Medicaid, food stamps and cash assistance for its employees. If the same holds true across the nation, the total public costs of supporting the families of low-wage Burger King employees reaches a staggering $273.4 million for 2007 alone.
Goldman is also a major investor in Lance Inc. This September, Lance purchased the Stella D'Ora cookie company and made a decision to shut a 70 year old factory in the Bronx, eliminating nearly 150 good paying jobs with healthcare.
For every company that Goldman Sachs owns in whole or part through its private equity arm, as well as for every company in which Goldman (combined with other Goldman subsidiaries or related companies) is a top 10 shareholder, Goldman must disclose:
1. The number of layoffs, number of jobs outsourced and number of jobs moved overseas during the period of Goldman's investment;
2. The number of workers who earn less than 200% of the US poverty level for a family of four ($44,100);
3. The average wage of non-executive workers and how these wages have changed over the last 10 years; and
4. The number of non-executive workers who have employer-provided health insurance and the number of workers that do not have this benefit.
2. A complete disclosure of Goldman Sachs' loan servicing and mortgage operations.
Goldman Sachs owns Litton Loan Servicing, which specializes in collecting on subprime and "problem" loans. According to the US Treasury Department, Litton has only modified 12% of the loan's eligible to through the government's HAMP program. Goldman must provide data on this loan portfolio, specifically:
1. The number of loans currently in foreclosure;
2. The number of foreclosures that have been completed;
3. The number of loans currently in default;
4. The number of loans being modified;
5. The number of trial modifications that have been made permanent;
6. The number of loan modifications that involve a modification of principal; and
7. The number of loans that have been restructured to be permanently affordable.
3. A complete disclosure of Goldman Sachs' sale of financial products to state and local governments
Businessweek's November 30th issue uncovered how the public budget crisis has been exacerbated by overly-complicated financial products sold to state and local governments and public bond authorities to "protect" them against risk.
Many of these products have gone sour and caused tremendous damage to public budgets while reaping hundreds of millions in fees for Wall Street. For instance, the New Jersey Transportation Trust Fund Authority must pay nearly $1 million a month through at least December 2011 to Goldman Sachs on derivative deals tied to municipal debt--even though the state retired that debt last year. While many of the deals that have already gone south have come to light, it is unknown how many more contracts have been written and may potentially implode.
Goldman Sachs must disclose all open derivatives, credit default swap, auction-rate security and other similar contracts that it has with local and state governments.6
Time and time again, taxpayers have demanded that Goldman Sachs take action to help America's economy recover. But instead of responding with bold new solutions, Goldman Sachs seems content on introducing insignificant and insufficient programs that do not even begin to take on the challenges of our current crisis.
If Goldman Sachs is truly interested in changing its image, it must change reality. Goldman Sachs can begin by disclosing the full extent to which the firm is holding back our economy.