Is This A “Buyback”? A Tax ? Or a Payoff?

Breaking news on Goldman Sachs($GS). They are “investing” $500 million nationwide in small business.

Josh Brown wrote about stock buybacks today. Buybacks are inefficient uses of capital, and essentially just buy top corporate management out of their option packages. This disenfranchises their shareholders. Maybe this is a different kind of buyback?

From the linked article in the Chicago Tribune.

The lending component of the initiative will be managed by Community Development Financial Institution funds, which work with businesses that are shut out of traditional sources of capital. Goldman Sachs has set aside $20 million in loans to be disbursed to Chicago-area businesses.

Interesting that a private company would donate $500 million to a government program. Especially when it is under siege from the same government.

Why wouldn’t Goldman simply set up it’s own private bank to administer funds and take an equity stake in each business it funded?

How is this helping Goldman shareholders? Do they write it off as a marketing expense and pay less in tax?

Investment bankers never act altruistically, and in this age of hyper politicization, I never take things for what they seem.

tip of the hat to @MPH777 for tweeting the story on Stocktwits.


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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