- The Washington Times - Wednesday, April 8, 2009

Goldman Sachs CEO Lloyd Blankfein says Wall Street compensation needs to be overhauled and hedge funds subjected to government oversight to reduce excessive risk taking that stoked the global financial crisis.

Mr. Blankfein, who received compensation valued at nearly $43 million last year, said Tuesday that lessons from the crisis include the need to “apply basic standards to how we compensate people in our industry.”

The chief executive of the Wall Street powerhouse suggested a handful of guidelines, including having an individual's performance evaluated over time to avoid excessive risk taking and only paying junior employees mostly in cash. The percentage of pay awarded as company stock should increase significantly along with an employee's total compensation, he added.

Mr. Blankfein also said unregulated pools of capital that are big enough to potentially endanger the financial system in a crisis should be put under “some degree” of government oversight. Those would include large hedge and private equity funds.

Public anger over the financial distress and taxpayer bailout of the banking industry spilled over to Mr. Blankfein's appearance as protesters confronted him at a Washington gathering of the Council of Institutional Investors.

As Mr. Blankfein began his speech, two women appeared on stage with a large purple banner saying, “We want our $$$$$ back.”

Mr. Blankfein asked them to leave, and they did. But the women later charged onto the stage, yelling protests against the bailout.

The protesters reflected a prevailing view that is “real and visceral,” Mr. Blankfein said.

”Much of the past year has been deeply humbling for my industry,” he said, acknowledging it could take years to rebuild the investor confidence lost partly by industry practices that appear “self-serving and greedy in hindsight.”


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