[CircleUp] Goldman Sachs Announces New Initiative "10, 000 Small Businesses"

[Heidi Davis]

Dear OFN members:

 

On Tuesday, Goldman Sachs announced a new initiative "10,000 Small
Businesses" that will include a significant new partnership with the
CDFI industry.  Under this initiative, Goldman Sachs will provide $300
million in loans and grants to CDFIs engaged in small business lending.
OFN was consulted on the development of this program and expects to play
a role in its implementation in the weeks ahead although the details
remain unclear.  OFN member, Seedco Financial Services, will be the
first CDFI participating in the Goldman initiative.

 

In addition, OFN continues to pursue access to low cost capital for our
industry through Treasury Department programs, including TARP.  Earlier
this week, I joined Enterprise Corporation for the Delta/Hope Community
Credit Union President Bill Bynum in Washington, DC to press the
industry's case with key policy makers.  I have reason to hope that an
announcement regarding this initiative will be made shortly.

 

As OFN members and other CDFIs continue to face liquidity and other
operating challenges, OFN will redouble our advocacy efforts.

 

To read the full press release about the initiative, click here
<http://www2.goldmansachs.com/our-firm/press/press-releases/current/10-k
-business.html>  

 

A Wall Street Journal article regarding the Goldman Sachs program is
reprinted below. 

 

Mark Pinsky

President & CEO

 

 

 

Goldman, Buffett Team to Aid Small Businesses by Susanne Craig and Scott
Patterson

 

Goldman Sachs Group Inc. said it is launching a $500 million
small-business assistance program that includes an advisory panel with
billionaire investor Warren Buffett.

 

The Wall Street firm made no connection in Tuesday's announcement
between the largest single charitable contribution in the firm's history
and public anger over its compensation. Goldman has earmarked $16.71
billion for compensation so far this year and repaid in June the $10
billion capital infusion it got from the U.S. government in 2008.

 

Tuesday, Goldman Sachs Chairman and Chief Executive Lloyd Blankfein
apologized for his firm's role in the credit crisis. "We participated in
things that were clearly wrong and have reason to regret," he said. "We
apologize."

 

The small-business program will make $250 million in charitable
contributions, with $200 million aimed at investor education and $50
million for grants to support community-development financial
institutions. The remaining $250 million will be invested in such
institutions to help them provide financing to small businesses.

 

Goldman said the first financial institution to receive money from the
firm will be Seedco Financial Services Inc., a nonprofit group in New
York that specialized in loans in economically distressed and
underserved communities. The first loans under the program will be made
in early 2010, the company said.

 

The initiative, called 10,000 Small Businesses, is aimed at unlocking
"the growth and job creation potential of 10,000 small businesses across
the United States through greater access to business education, mentors
and networks, and financial capital," Goldman said in a statement.

 

The Obama administration has pointed to small businesses as a crucial
source of job growth.

 

The board set to oversee Goldman's push includes several financial
heavyweights. Mr. Blankfein, Mr. Buffett and Michael Porter of Harvard
Business School will serve as co-chairmen.

 

"Sometimes people lack basic business skills, like accounting," said Mr.
Buffett, who bought a major stake in Goldman last year. "This is a way
to step on the accelerator a little bit. Maybe more than a little bit."

 

The company's conversion to a bank-holding company last year brought
Goldman under stricter regulation, including compliance with the
Community Reinvestment Act. The federal law encourages banks to meet the
credit needs of all the communities in which they operate.

 

The new program wasn't designed to fulfill Goldman's CRA-related
obligations but is likely to be looked upon favorably by the Federal
Reserve, Goldman's primary regulator, according to a person familiar
with the matter.

 

Tuesday's announcement was the second big charitable commitment made by
Goldman this year. In October, the firm announced a $200 million
contribution to the Goldman Sachs Foundation. In 2008, Goldman launched
its 10,000 Women effort to provide women in emerging markets with a
business education.

 

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