Goldman Sachs CFO seeks to repay TARP funds

NEW YORK (Reuters) - Goldman Sachs Group Inc GS.N Chief Financial Officer David Viniar said the bank is keen to avoid restrictions it agreed to after receiving funds from the U.S. government late last year and it is looking to pay the money back as soon as possible.

The flags of the U.S. and China hang outside of 85 Broad Street, headquarters for the investment bank Goldman Sachs in New York, October 23, 2008. REUTERS/Brendan McDermid

The investment bank, which received a $10 billion capital injection from the U.S. Treasury’s Troubled Asset Relief Program in October, is not happy with the strings that came attached to the money.

Compensation restrictions and certain capital requirements were part of the original injection, and extra limitations may be in store after U.S. President Barack Obama imposed tough new rules limiting pay for companies receiving government aid.

“We would like to get out from under that,” Viniar said, adding that the bank aims to pay back the $10 billion this year.

Viniar said Goldman Sachs is also cautious about buying a bank, a move many have urged upon the investment bank to ensure its access to stable deposit funding.

Banks have come under heavy fire for paying executives too much after receiving more than $300 billion of capital from the government and trillions of dollars of additional U.S. support. A report last week said that banks paid out $18.4 billion of bonuses, a fact that Obama called “shameful.”

But Goldman can potentially pay back its $10 billion, and avoid salary caps, by issuing preferred stock rather than common stock, Viniar said.

Shares of Goldman Sachs were up $6.13 or 7.4 percent at $88.94 on the New York Stock Exchange on Wednesday afternoon, amid a broader rally in shares of financial companies.

Obama said on Wednesday that compensation at TARP recipients would be limited to $500,000 a year, adding that lower compensation is a crucial element of restoring taxpayer trust.


Investors have pressed Goldman to buy a bank to boost its deposit funding, which is seen as a more reliable way for the investment bank to finance itself amid the credit crunch.

But Viniar, speaking at a Credit Suisse Financial Services conference on Wednesday, said Goldman is in no rush to acquire another institution, and will look for other ways to boost its deposits.

“Don’t pick up The Wall Street Journal looking for a Goldman Sachs acquisition because I think you will be largely disappointed,” he said.

There is a long history of financial services acquisitions that have failed due to the difficulty of integrating different companies’ cultures, he said, and this makes Goldman wary of such an acquisition.

“I don’t expect our form to change,” he said, adding, “I expect us to be largely a wholesale company.” Wholesale finance companies fund themselves in bond markets.

Reporting by Elinor Comlay; editing by John Wallace and Matthew Lewis