Roasted vampire squid turns out to be dish of the day on Wall Street

It ought to have been a moment of triumph for Goldman Sachs, the most feared, revered and envied of Wall Street's investment banks. Long synonymous with power and wealth, the firm delivered the biggest, healthiest profit since it was established in a one-room Manhattan office by a German immigrant, Marcus Goldman, in 1869. But hunched over their computer screens from dawn until late at night, Goldman's elite bankers were unprepared for the ferocity of the looming backlash.

Over the three months to June, Goldman clocked up $3.44bn of profits, amounting to $38m a day or $1.58m an hour. Making money has suddenly become easier. Under Goldman's policy of dedicating half its revenue to staff pay, the firm's 29,400 employees can expect average take-home packages of between $700,000 and $900,000 for the year if the present level of prosperity continues.

Not everybody is impressed - far from it. In Congress, senators fulminated against the divide between two Americas: Wall Street trumpeting its return to prosperity while citizens on the high street lose jobs and homes. A leading US union, the Service Employees International Union, accused Goldman of emerging from the credit crunch "unrepentant and unreformed".

An article by writer Matt Taibbi in Rolling Stone magazine compared Goldman Sachs to a parasitic vampire squid squeezing the life out of humanity. The New York Times said that Goldman employees were known in New York as the "bandits of Broad Street".

The rightwing television host Bill O'Reilly referred to Goldman as "swine". And the Nobel Prize-winning economist Paul Krugman weighed in, declaring that what the bank does is "bad for America". "Goldman made profits by playing the rest of us for suckers," wrote Krugman, pointing out that the firm made a fortune in the run-up to the financial crisis by betting on a collapse in the sub-prime mortgage market.

In Westminster, 33 MPs have signed an early day motion demanding a 90% tax on bankers' bonuses that are worth more than 15% of salary. Across the English Channel, President Nicolas Sarkozy's top adviser, Henri Guaino, declared that the bank had posed a "gigantic" moral problem: "Goldman Sachs wouldn't exist had American taxpayers not come to its aid. To be drowning in dollars and bonus money today is utterly scandalous."

Goldman's critics fall into two camps. There are those who object to the sheer scale of its profits, on the grounds that such sums can only be made by taking irresponsible risks bound to end in financial disaster. And there are those who, while welcoming its return to fiscal health, are disgusted that Goldman still insists on giving 49% of its revenue to already well-off staff. This, after all, was the bank that handed pay packets of more than $20m to 50 of its employees before the credit crunch began to bite three years ago. Why, asked former New York governor Eliot Spitzer, could Goldman not reinvest the proceeds in job-creating industries such as green energy or biotechnology?

Most galling of all is that, in the eyes of many, the money has been made with the help of the US government. In the dying days of the Bush administration, Goldman was one of nine top banks ordered by the US Treasury to accept bailout money whether they needed it or not.

Robert Borosage, president of the left-leaning Campaign for America's Future, says Goldman has been crucially bolstered by the US government's implicit message that it is too big to fail: "These guys are going back to their old games with a new sense of empowerment thanks to the Federal Reserve ultimately back-stopping them."

Within Goldman, there is disbelief at the avalanche of hatred. A spokesman describes many of the attacks on Goldman as "unjustified and hideously distorted". The bank points out that it pays a US tax rate of 31% on its earnings - so the public get a third of its profits. Its success, argues the firm, helps stimulate economic activity.

"The government and other banks want us to engage fully and provide liquidity into the markets," says Goldman's spokesman. "It seems perverse to criticise firms that have done what they're asked to do for doing what they've been asked to do."

As far as remuneration is concerned, Goldman does not consider itself a typical Wall Street employer. It recruits bright people at a young age - and it does not rely on Ivy League or Oxbridge graduates. On average, Goldman staff become partners by the age of 35 and they are quietly encouraged to leave a decade later. Many go into public office, a fact which further enrages critics, who view the succession of senior US government roles held by former Goldman staff as evidence of the bank's powerful tentacles.

Goldman sources cite another sector popular among its former employees - or "alumni", as it calls them - as evidence of the need for top-dollar bonuses. Many hedge funds and private equity firms have been established by alumni, so it is not so much the prospect of poaching by competitors that worries the bank but the allure for its employees of going it alone. link.....