If the program succeeded, the giant bank would profit. The more recidivism dropped, the more taxpayers would have to pay Goldman Sachs. On the other hand, if recidivism didn't drop significantly, Goldman would lose its investment.
So far, it's too early to tell whether or not the program, which focuses on cognitive behavioral therapy, will meet its goals, but according to reports from the Department of Corrections, fighting has already been reduced at Rikers, so Goldman may just cash in.
The Rikers experiment is an example of a new trend in what are called "social impact bonds." Burning questions about who profits and who loses in these schemes have become the subject of debate as the trend catches hold. Let's explore.
Here you can read all about the 'social impact bonds.'
And the final paragraphs:
Matt Taibbi, who memorably dubbed a Goldman a "great vampire squid" in a 2009 article in Rolling Stone, noted that a 650-page report on the financial crisis put out by the Senate Subcommittee on Investigations revealed plentiful details of Goldman Sachs' crime spree leading up to the disaster:
"...The mountain of evidence collected against Goldman by Levin's small, 15-desk office of investigators — details of gross, baldfaced fraud delivered up in such quantities as to almost serve as a kind of sarcastic challenge to the curiously impassive Justice Department — stands as the most important symbol of Wall Street's aristocratic impunity and prosecutorial immunity produced since the crash of 2008."According to the report, Goldman Sachs executives viewed the impending financial crisis — which they helped create! — as an opportunity to enrich themselves both at the expense of clients and eventually of taxpayers through the bailouts. Yet in 2012, the Justice Department announced that it would not pursue criminal charges against the bank. Attorney General Eric Holder gave us a hint as to why when he explained to Congress in 2013 that some banks were too big to jail.
How many of the young men at Rikers Island ended up there in part because of the wreckage in the economy caused by that crisis and the subsequent cuts in services demanded by people like Lloyd Blankfein?
Perhaps we could create a social impact bond focused on sending criminal bankers to prison. The more who end up serving time, the more the bondholders will get paid. That would be a very interesting experiment. Any takers at Goldman Sachs?
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