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New Standards at Goldman Sachs Have Me ROFLMAO

Posted by Larry Doyle on May 3, 2010 3:09 PM |

Is Goldman Sachs finding religion? Is the highest profile firm on Wall Street about to publicly pronounce a measure of self-imposed penance given the recent civil charges and criminal investigation brought against it by the SEC and DOJ respectively?

A report in today’s Financial Times indicates that Goldman has entered the confessional and is ready to let the public know just how meaningful its recompense will be. Prior to reading this article, I fully expected that Goldman was ready to announce that an internal committee had been formed to determine the appropriateness of transactions prior to their being marketed or underwritten. JP Morgan implemented just such an initiative after the debacle surrounding a variety of transactions with that fine, upstanding crowd (Fastow and Skilling) at Enron.

After reading and re-reading the FT’s overview of Goldman’s new plans, all I could do was laugh. Why? The FT reports, Goldman Plans to Overhaul Practices:

Goldman Sachs is planning to change some of its practices in dealing with institutional clients, a step that could help it settle charges filed last month by US securities regulators.

The internal policy revisions come as the US Securities and Exchange Commission steps up demands for corporate governance changes as part of any negotiated settlement.

While talks are not under way to resolve the SEC’s allegations that Goldman misled investors during the financial crisis over the sale of mortgage-backed securities, people familiar with each side of the dispute concede a settlement would be in the best interests of both parties.

According to one person familiar with Goldman’s plans, it would now tell employees to seek confirmation from clients that they understand the risks associated with any given security, and how their dealings with Goldman might change their total exposure.

You know Goldman’s salespeople are ROFL right now thinking as to how they are going to ask their clients if they understand the risks connected to a security. Picture Goldman salespeople saying the following:

“So, do you know where and how we are taking you to the hoop here?”

“Do you know where and how you’re getting drilled so that my trader can overpay me and we can both get out to the Hamptons this summer?”

“This security is really cheap, don’t you agree? You understand all the risks, right? Yeah, I thought so.” Then, he hangs up the phone and it’s back to rolling on the floor laughing.

The FT continues:

Goldman is also studying ways to ensure that complicated securities are marketed only to appropriate clients, the person said. Goldman’s push to “tighten up” standards suggests its willingness to adapt in the face of mounting scrutiny.

The standard that Goldman is aspiring to uphold is a basic rule known as suitability. It is supposed to be practiced all the time. For Goldman to promote it as a new initiative for the firm at this juncture is a kick in the balls to everybody who has ever truly practiced it.

Instead of these aforementioned ROFLMAO practices, Goldman may want to implement proper disclosure, transaction previews, a reputation committee, and increased transparency. At that point, we can all get up from the floor and make some real progress.

LD

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  • phil trupp

    “Suitability” won’t get them anywhere at the SEC. As you point out, suitability is the first requirement of the transaction, and it is the lowest rung on the ladder. GS, as Ricky Ricardo used to say, “has a lot of ‘esplainin’to do.” As for the coming DOJ rap, that ‘esplainin’is bound to get a whole lot more intense.

  • Lawrence Baker

    SEC vs. Goldman- 21st Century age of Enlightenment or Tyranny? Will bankers and big oil lead humanity into an enlightened 21st. Century of green energy and humanitarianism or will this be the century of World Totalitarianism of the New World Order? We know that “morality” is a “no” word for bankers, big oil and investors alike; yet they are leading us into the New World Order with their heartless and coldblooded culture of greed by the few. World conquest by tyranny is not new and it certainly is not orderly; it is chaos. Hitler already tried World domination by tyranny in the last century. The nations of Greece, Latvia, and Iceland have already fallen into “order” and Spain, France, Germany, Portugal, Ireland, Italy, United Kingdom and the United States of America are scheduled to fall into “order”. The American people do not want to lose our Democracy, Independence and Freedom; yet this World totalitarian agenda emanates from the United States of America and is lead by the Bush/Obama Administration in our name. The World is looking at the American people as their last resort for salvation and praying that the American people will stand up to this evil force and do the right thing. By saving ourselves, we will also save them. We are the only ones who can change the direction of our own country with what freedoms we have left.

    The SEC vs. Goldman is a test of strength between the American people and the World bankers, indeed, the New World Order. If the American people do not bring the bankers to Justice in our court system; the bankers will be free to dominate the World.

    The injunctions will lead to the White House and the Bush/Obama Administration which is dominated by Trilateral World bankers. Zbigniew Brzezinski is the designer and architect of the bankers Trilateral Commission and the New World Order; he is also Obama’s top advisor. Geithner, Volker, Greenspan, Summers, Corrigan and Peterson are all of the same banking family of World bankers (America is their host) Goldman Sachs, Morgan Stanley, Bank of America, JPMorgan Chase, Wells Fargo Federal Reserve, IMF, World Bank, BIS, etc; their tentacles reach into every economy in the World. The World total economic output in 2009 was 58.07 Trillion and the total World bond market was 82.2 Trillion. The largest market in the World is the Derivatives market at 600 Trillion and is used primarily by the bankers as a weapon of mass destruction of economies to bring them in line with the New World Order. Their modus operande is the same for American citizens as it is for Nations.(pt.1)

    The banker and oil dominated Trilateral Bush/Obama Administration has purposely driven the United States of America into debt under their expert banking management by the systematic pillaging of our Treasury. Our National debt interest is at 15% about the same as the United Kingdom according to Moody’s bond rating March 15. “the U.S. will be paying about 15 percent of revenue in interest payments, more than the 14 percent limit that would lead to a downgrade to AA, Moody’s said.”
    http://www.bloomberg.com/apps/news?pid=20601068&sid=a0a8xAghPS8I

    In the financial world, loosing your AAA bond rating changes the banking agreement substantially (as every home owner knows) that is when the fine print kicks in and the spiral to the bottom begins. Look at Greece, Latvia, Iceland and now the UK. Germany, France and Spain AAA credit ratings are in danger as reported in the U.K Telegraph on March 15 (referring to Moody’s) “The US rating agency said the US, the UK, Germany, France, and Spain are walking a tightrope-“
    http://www.telegraph.co.uk/finance/economics/7450468/Moodys-fears-social-unrest-as-AAA-states-implement-austerity-plans.html

    To control and accelerate that rush to the bottom of Nations, major banks are frontloading the odds of default of a Nation down on Wall Street in a computer so they can control and manipulate trades with high-frequency trading in derivatives. High-frequency trading is how Goldman Sacks (U.S.A) makes at least 200 million a day in derivatives on Wall Street and accounts for most of the 3.3 billion made in profit last quarter. This one example of Goldman Sachs (U.S.A) operations is but the tip of the arrow head and the shaft is sure to follow. By flying the United States of America’s economy and government into the ground the New World Order of Trilateral Traitor bankers become winners. Now, who is the terrorist?

    I hope Americans have empathy for the people of Greece and all the other people of Nations who face “Austerity measures” because their destiny will soon be our own fate. The bankers are brutal; the National financial burden is on the people with forced tax followed with the gutting of social services and privatization of National infrastructure and National Natural Resource for pennies on the dollar.
    If you can empathize with these people I suggest that you take action and button-hole your representatives in Congress today and tell them to make a stand for the American People against this takeover of our government by Trilateral bankers and the New World Order. Demand that they insist that ALL of the subversive Trilateral members in government to STAND DOWN. Insist that Treason charges be served on all who conspired to overthrow our American Independence, Democracy and Freedom (there are only about 1,500 Traitors). Insist that Free Press, the watch-dog of Democracy, be restored by breaking up the monopolies in the mass Media.
    Main Street Capitalism, Competitive Market, and Free Enterprise are America’s tried and true standard and our economy and government can recover from this treachery if we act now by getting back to our roots of industry, manufacturing and technology instead of being smothered by the Multinational Corporate Empire, by proxy, by our government. Our economy needs Fair Trade not (Free (sic) Trade and Free Enterprise and Competitive Market not controlled markets by the multinational corporate monopolies.

  • The country is hurting for smart advice
    and investors for good deals. Right
    now the public should be able to
    expect Goldman Sachs to be in a position
    to provide some leadership in that
    regard. However, Goldman management
    seems to be unattached. They have a
    smug notion that they did a smart
    thing by saving their firm while the
    country was being brought
    to it’s knees. During the hearings
    last week Goldman executives exibited
    a somewhat sociopathic attitude touting
    how smart they were in pulling the wool pver,
    over the eyes of their cluless clients
    while not being able to grasp why the
    american people are so mad at them.
    Outstanding management doesn’t build a
    culture whereby smart people are
    prompted to do stupid things. Even for
    a profit. Hopefully there are enough
    enlightend employees left at Goldman to do
    something about it before the
    government does.






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