The Rich Are Not Like You And Me: Foreclosing in the Hamptons and Goldman Sachs’ City Windfall


It’s not just through wedding photos that we learn that the rich and powerful are just like us: they get foreclosed on as well! You know the Post had to go with the “LIFE’S A BEACH!” headline for its story on how banks are getting ready to foreclose on 120 borrowers in East Hampton and Southampton. Twenty percent of those homes are worth more than a million dollars! This allows readers to enjoy a nice cup of Monday-morning schadenfreude, as the paper shows us the stately manors that are way behind in mortgage payments. Socialites, real-estate moguls and executives are feeling the credit crunch and are either selling their homes or are on their way to foreclosure. See, the rich are just like us….

Or maybe they’re not. The Daily News has an exclusive investigative piece on a potential $300 million-plus windfall investment bank Goldman Sachs may have coming its way thanks to the slowdown of development at Ground Zero.

In 2005, then-Gov. George Pataki and Mayor Bloomberg made a deal with the investment bank that if the Port Authority didn’t finish much of the development of Ground Zero by next year, the state would pay huge penalties to Goldman Sachs. (The firm is building its new headquarters near the Ground Zero site.)

The $321 million is in escrow. It consists of $161 million in lease payments for the state land the bank is building its headquarters on and another $160 million in sales tax payments. If the Port Authority doesn’t finish certain transportation projects by the end of 2009, the money reverts back to Goldman Sachs. (The projects are already several years behind schedule.) Another provision of the sweetheart deal was that a security plan for the area needed to be completed by 2010, which may be impossible because the structures that are to benefit from said security plan have yet to be built.

The city claims it’s on track with the security plan and that the two sides are still negotiating. Goldman Sachs is the country’s richest investment firm with $11.6 billion dollars in profit last year.

This article from the Village Voice Archive was posted on May 12, 2008


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