A great PR move for Goldman Sachs?

There's no doubt that Goldman Sachs (GS) and to some extent Morgan Stanley (MS) face some tricky PR issues when it comes to bonus payments for 2009. They are going to be massive at Goldman Sachs anyway--at a time when the economy is reeling. Not paying these bonuses is not really an option. We've noted that Goldman Sachs anyway seems to be laying the groundwork for some kind of PR campaign. The need for which was underscored by the protests outside the firm's Chicago office. Protesters had plans "to ask"  the bank to put the expected $23 billion bonus pool toward mortgage foreclosure prevention--which of course, isn't going to happen. But that doesn't mean there are no legitimate options.

There's no denying the need for small business lending right now. One approach, put forward by Sen. Mark Warner would combine the efforts from the Treasury Department, Federal Reserve and private banks to create a $50 billion pool that would flow to small businesses. Separately, the Treasury is developing a plan that would use around $10 billion of bailout funds to boost lending to small businesses. 

One commentator via the Huffington Post suggests there may be a meeting of interests at play. Goldman Sachs has entered into an agreement with small  business lender CIT that will hopefully allow the lender to reorganize. Goldman will apparently reduce debts to about $2 billion. CIT would pay Goldman about $300 million if it files for bankruptcy. The deadline for bondholders to vote on the company's restructuring plan is next week. 

Would it be wise for Goldman Sachs to play an even greater role in the rebuilding of CIT? Perhaps even purchasing a large equity stake? I doubt that will happen, but the benefits would be obvious. It would give Goldman Sachs a way to interact directly with Main Street in a positive way. It would certainly help support any suggestion that what's good for Goldman Sachs is good for America. What other argument does it really have? In general, all banks ought to playing up what they do for the economy. - Jim