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second try. Paulson forced Goldman to take $10 billion of TARP money, as a further step to restore investor confidence in the firms at ground zero of American capitalism. Paulson’s evolving thinking, which was shared by both Ben Bernanke, the chairman of the Federal Reserve Board, and Timothy Geithner, then president of the Federal Reserve Bank of New York and now Paulson’s successor at Treasury, was that the economic status quo could not be restored until Wall Street returned to functioning as normally as possible. “We were at a tipping point,” Paulson said in a speech a few weeks later. Paulson’s idea was that the banks receiving the TARP funds would make loans available to borrowers as the economy improved.
    Blankfein never believed Goldman needed the TARP funds—and perhaps unwisely said so publicly, earning him Obama’s ire. Exacerbating the concerns of the banks that received the TARP money was the fact that Obama had appointed Kenneth Feinberg as his “pay czar” and gave him the mandate to monitor closely—and limit if need be—the compensation of people who worked at financial institutions that received TARP money. Wall Street bankers and traders like to think their compensation potential is unlimited, and so the idea of having Feinberg as a pay czardid not sit well. At the earliest opportunity, which turned out to be July 2009, Goldman—as well as Morgan Stanley and JPMorgan Chase—paid back the $10 billion, plus dividends of $318 million, and paid another $1.1 billion to buy back the warrants Paulson extracted from each of the TARP recipients that October day as part of the price of getting the TARP money in the first place.
    “People are angry and understandably ask why their tax dollars have to support large financial institutions,” Blankfein wrote in his April 27 letter. “That’s why we believe strongly that those institutions that are able to repay the public’s investment without adversely affecting their financial profile or curtailing their role and responsibilities in the capital markets are obligated to do so.” He made no mention of pay caps as influencing his decision to repay the TARP money or that the TARP money was supposed to be used to make loans to corporate borrowers. Instead, Goldman likes to boast that for the nine months that it had the TARP money it said it didn’t want or need, American taxpayers received an annualized return of 23.15 percent.
    Ironically, no one seemed the slightest bit grateful. Rather, there was an increasing level of resentment directed at the firm and its perceived arrogance. The relative ease with which Goldman navigated the crisis, its ability to rebound in 2009—when it earned profits of $13.2 billion and paid out bonuses of $16.2 billion—and Blankfein’s apparent tone deafness to the magnitude of the public’s anger toward Wall Street generally for having to bail out the industry from a crisis of largely its own making made the firm an irresistible target of politicians looking for a culprit and for regulators looking to prove that they once again had a backbone after decades of laissez-faire enforcement of securities laws. Aiding and abetting the politicians in Congress, and the regulators at the U.S. Securities and Exchange Commission, were scornful and wounded competitors angry that Goldman had rebounded so quickly while they still struggled.
    Those who believe, like Obama, that the steps the government took in September and October 2008 helped to resurrect the banking sector, and Goldman with it, point to a chart of the firm’s stock price. Before Thanksgiving 2008, the stock reached an all-time low of $47.41 per share, after trading around $165 per share at the start of September 2008. By October 2009, Goldman’s stock had fully recovered—and more—to around $194 per share. “[Y]our personally owned shares in Goldman Sachs appreciated $140 million in 2009, and your options appreciated undoubtedly a multiple of that,” John