Lloyd Blankfein, the ex-Goldman Sachs CEO whose bank accepted bailout funds during the financial crisis, said that large companies should be “very reluctant” to take taxpayer money amid the coronavirus pandemic.
“Big companies should be very reluctant to take government money,” Blankfein said Thursday on CNBC’s Squawk Box in response to a question about how the public will view companies that accept money from the federal small business relief program.
“I think over time, the goal posts will shift” from a sense of urgency in disbursing funds to greater scrutiny on companies that shouldn’t have kept them, Blankfein said. “It’s kind of a natural phenomenon, I don’t think it’s bad behavior on the part of the government.”
Public companies including Shake Shack and AutoNation were criticized after taking part in the federal Paycheck Protection Program, despite being large firms with access to other forms of capital.
The two companies are among more than 40 that have said they would return the funds so that small businesses would have a better shot at getting loans. The first round of PPP went quickly, and hundreds of thousands of small businesses were left in limbo while larger companies had greater success at tapping the program.
Companies that shouldn’t have applied for PPP loans have until May 14 to return the funds.
“There will be some resentments that emerge because some people will have gotten help and others in a similar situation won’t have,” Blankfein said during the wide-ranging interview. “If you need it, take it, but you really shouldn’t need it,” he added.
Blankfein may be speaking from experience: Goldman took $10 billion from the Treasury’s Troubled Asset Relief Program at the height of the financial crisis in October 2008. Although it paid the funds back in less than two years, the move fueled public anger that financial firms had to be rescued after the industry helped cause the subprime mortgage crisis.