Exclusive: Senior Goldman Execs Worry About Bonus "Karma"


Senior executives at Goldman Sachs are wary about outside speculation that Goldman Sachs employees would be getting bumper bonuses this year.

Although the investment bank is widely heralded as one of the most successful on Wall Street and has freed itself from TARP restrictions by raising capital and making profitable trading moves, executives at Goldman are aware that the market could still turn against them. The profits gained in a good quarter or two could be reversed if Goldman’s fabled trading agility fails in an unexpected market turn.

Last year, Goldman did well for the first three quarters, despite a credit crunch that brought down Bear Stearns, Lehman Brothers and Merrill Lynch. But asset prices fell 40% in the fourth quarter, damaging the bank. Goldman took $10 billion of government aid in the fourth quarter. Executives are confident they have learned from last year’s debacle in the financial sector, but it is a cautious confidence.

Talk of big bonuses, which some say could rival those of the boom year of 2007, is premature, a senior executive warned. Goldman typically doesn’t begin discussion of bonuses internally until the middle of the fourth quarter.

“Personally, I think trying to guess the outcome of a year in the middle of it is bad Karma,” one managing director at Goldman said.

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