Goldman Sachs, Buffett team to empower small businesses

NEW YORK -- Goldman Sachs announced Tuesday that it would spend $500 million to help small businesses as part of a program offering education, mentoring and access to capital to 10,000 firms. The effort also involves billionaire investor Warren E. Buffett, community colleges and other organizations.

Goldman's initiative comes as it tries to fight public perceptions of the firm as a greedy titan that benefited greatly from the government's extraordinary efforts to revive Wall Street but has done little to ease the ongoing pain on Main Street. Politicians have attacked Goldman, now back to recording some of the largest profits in its corporate history, for preparing to pay billions of dollars in bonuses. The investment bank has set aside $16.7 billion during the first three quarters this year to compensate employees, up from $11.4 billion in 2008. During that time, Goldman earned $8.4 billion, primarily fueled by its trading and investments.

Goldman's announcement also comes as the Obama administration is trying to emphasize assistance to small businesses, which fuel a substantial portion of job growth, making them a top economic priority. The $700 billion financial rescue program, while credited by many analysts for preventing a collapse of the financial system, has been attacked by many in the public and Capitol Hill for bailing out Wall Street firms that contributed to the financial crisis.

Lloyd Blankfein, Goldman's chief executive, has recently made public comments acknowledging the company's role in the financial crisis and on Tuesday, he apologized in a New York speech.

"We participated in things that were clearly wrong and have reason to regret," he said, according to Bloomberg News. "We apologize."

Through its initiative, "10,000 Small Businesses," Goldman will invest $300 million to community development financial institutions. Of the $300 million, $50 million will be in grants and $250 million in lending, Goldman said. The firm will also provide $200 million in grants to community colleges and universities, which will use the funds for scholarships to small-business owners. Goldman employees, along with other business groups, will offer mentoring to the owners.

Buffett, Blankfein and Michael Porter, who heads the institute for strategy and competitiveness at Harvard Business School, will serve as co-chairmen on the advisory council. The initiative is modeled after "10,000 Women," Goldman's $100 million giving initiative launched in 2008 to support women in developing countries. Buffett is a director of The Washington Post Co.

Dina Habib Powell, Goldman's managing partner in charge of corporate engagement who leads that effort, will also head the small-business initiative. Addressing suggestions that the initiative was created to boost Goldman's image and soothe populist anger, Powell said, "We've been working on these kinds of initiatives that use our resources and our people and our convening power to make a serious impact."