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HomeGoldman Sachs: The Reputation You Deserve
Posted by Larry Doyle on March 2nd, 2010 7:08 AM |
When you sleep with dogs, you wake up with fleas.
Of all the lines I heard bandied about during my time on sales and trading desks on Wall Street, the line I reference above is one of my favorites. Why? That line goes straight to reputation.
As much as anybody may want to whine, bitch, or moan about being treated unfairly, ultimately the court of public opinion will convey upon an individual or an entity the reputation he or they deserve.
As a parent, I have often had the discussion with my children that they had better be exceptionally careful as to what they do and with whom they hang because you carry your family name with you everywhere you go and you only get one reputation. For this very reason, I strongly believe the greatest risk in life is reputation risk. (more…)
Goldman’s Gerald Corrigan: Best Defense is Good Offense
Posted by Larry Doyle on February 23rd, 2010 11:15 AM |
$300 million is a lot of money.
Was it enough for the preeminent firm on Wall Street, Goldman Sachs, to risk its reputation? Apparently it was because that is the reported figure Goldman earned from transactions it structured and executed with the nation of Greece to help hide that nation’s fiscal woes. I do not discount that Goldman took risk in these transactions, but $300 million is a lot of money.
Believe me, every firm on Wall Street would sell its soul for a lot less than that. Goldman Sachs was not the only firm on Wall Street to enter into derivative transactions with Greece or other nations to cover declining fiscal positions. Goldman is merely the highest profile firm.
What does a firm like Goldman do now that it is being besieged by regulators, central bankers, and national leaders, primarily Angela Merkel of Germany, for structuring and executing these transactions? (more…)
Goldman Sachs: ‘The Great Enabler’
Posted by Larry Doyle on February 17th, 2010 2:28 PM |
As more details are released about Goldman Sachs’ derivative transactions that allowed Greece to disguise its overall financial health, the question begs as to the integrity of this very storied Wall Street franchise. In short, I would define Goldman Sachs as ‘The Great Enabler.”
How did ‘The Great Enabler’ operate? Recall that Goldman CEO Lloyd Blankfein indicated a few months back that Goldman Sachs was doing “God’s work.” He failed to mention that the deity to which Goldman prayed bleeds green. Additionally, the prayer which Goldman offered was nothing more than ‘maximize revenues now, worry about problems later, and keep your mouth shut.’
For a peek inside Goldman’s prayer book, let’s review a recently released report from Bloomberg, Goldman Sachs, Greece Didn’t Disclose Swap Contract:>>>> (more…)
Goldman Drops ‘F-Bomb’ on Alistair Darling
Posted by Larry Doyle on February 9th, 2010 1:51 PM |
British Chancellor of the Exchequer Alistair Darling
If the taxman is going after the bonus, then don’t be surprised when the financial industry shifts a greater percentage of overall compensation to higher fixed salaries.
Recall a few weeks back that the UK Chancellor of the Exchequer Alistair Darling announced an aggressive surcharge on the bonus pools of its banks. Well, it did not take long for the banks to respond and revise their base salary structure.
I am happy to link to a London-based site, eFinancialCareers, which highlights changes in the salary structure at banking operations in the UK and specifically focuses on the expected new salary structure at Goldman Sachs. Sarah Butcher of eFinancial Careers writes, Exceptional Salary Increases at Goldman Sachs?: >> (more…)
Goldman’s Easy Money Days Are Over
Posted by Larry Doyle on January 21st, 2010 11:32 AM |
If I had a nickel for the number of people who have asked me how Goldman Sachs makes money, I would have a lot of nickels.
Goldman Sachs as a company is easily vilified. America always wants a villain when times are tough. Goldman makes the most money on Wall Street so they must be the ‘baddest’ guys. Well, generally speaking people are never as good nor as bad as they may seem. Look at Tiger Woods. He fooled America for a good long time. The fact is, Goldman Sachs mastered a business model which no other Wall Street enterprise fully embraced. I am certainly not a Goldman apologist and believe they very likely took advantage of situations that drove enormous profits. I highlighted the Goldman business model last July in writing, “How Does Goldman Sachs Operate?”: >> (more…)
The Financial Crisis Inquiry Commission Should Investigate…
Posted by Larry Doyle on January 11th, 2010 9:28 AM |
Will America ever truly learn what happened on Wall Street that brought our markets, our economy, and our country to its knees?
We should not expect the incestuous Wall Street-Washington partners to implicate themselves and thoroughly expose their shortcomings. A full 16 months since the failure of Lehman Bros. and how much have we truly learned? What change has really occurred? Who has been fired in Washington? Who has been indicted on Wall Street? Will the Financial Crisis Inquiry Commission, charged with investigating the factors which facilitated our economic disaster, truly be effective?
The truth may hurt but if the hard questions are not asked, the failings are not exposed, and those responsible are not held to account, then the lessons will not be learned, and the experience will likely repeat itself.
Will the commission pretend to investigate, but ultimately wilt under the pressure of the incestuous pillars of power? Will the commission rise above the fray, hold people and institutions to account, and make our country proud? Will the commission use its power to subpoena, if need be?
Whom should the commission pursue? What agencies and institutions should the commission target? If I were on the commission, I would recommend pursuing the following targets: (more…)
Is Lloyd Blankfein a Liar?
Posted by Larry Doyle on November 18th, 2009 3:45 PM |
Yesterday I wrote “Just How Sorry Is Goldman Sachs?” in response to a blanket, unspecified, and unsolicited apology put forth by Goldman Sachs CEO Lloyd Blankfein. In my commentary, I asserted:
Wait a second. Blankfein admits that Goldman participated in activities that led to the crisis? Get Lloyd back in here and ask him for specifics.
In an attempt to probe as to Goldman’s culpability, I inquired:
What do you think Blankfein was referring to when he stated that Goldman “participated in things that were clearly wrong”? I’ll get the ball rolling with a few possibilities:
1. Manipulated the equity markets via computer programs connected with high frequency trading.
2. Ran over Tim Geithner in the settlement of open positions with AIG.
3. Facilitated insider trading on behalf of hedge funds.
4. Intentionally misled lesser prioritized clients via trading huddles.
5. Abused privileged information provided by former Goldman execs now in government positions.
6. All of the above.
7. Other . . . please share your opinions.
Today we learn the answer is most likely choice # 2. It appears that Lloyd Blankfein would like forgiveness for the aggressive posture it took with Uncle Sam in the process of settling its exposure with AIG. Recall that Blankfein has repeatedly asserted that whether AIG went down or not was not meaningful to Goldman Sachs because Goldman had secured collateral from AIG to cover its exposure. (more…)
Just How Sorry is Goldman Sachs?
Posted by Larry Doyle on November 17th, 2009 7:47 PM |
Goldman Sachs CEO Lloyd Blankfein
Mea culpa, mea culpa, mea maxima culpa . . .
It is not everyday that the head of a major Wall Street bank issues an unsolicited and unspecified apology. In fact, in my 23 years on Wall Street I do not ever recall a Wall Street CEO issuing an apology in the manner that Lloyd Blankfein did today. What did Blankfein say? From a Bloomberg report, Goldman, Buffett Establish $500 Million Small-Business Program:
Blankfein, speaking at a conference today sponsored by Directorship magazine, apologized for Goldman Sachs’s role in some of the activities that led to the financial crisis, without providing specifics.
“We participated in things that were clearly wrong and we have reason to regret and we apologize for them,” Blankfein said at the New York event. The magazine named him its CEO of the year.
Wait a second. Blankfein admits that Goldman participated in activities that led to the crisis? Get Lloyd back in here and ask him for specifics. (more…)
Goldman Sachs Doing God’s Work?
Posted by Larry Doyle on November 10th, 2009 12:20 PM |
Do you get the sense that Wall Street in general and Goldman Sachs in particular are getting overly miffed at the disdain heaped upon it by the American public? I do.
In a spirited defense put forth by Goldman Sachs CEO, Lloyd Blankfein invokes the Lord’s name in promoting the virtues of Goldman Sachs’ work. Aggressive move by Mr. Blankfein. The Wall Street Journal highlights this story in writing, Goldman Sachs’ Blankfein on Banking: ‘Doing God’s Work’:
The Times of London’s mammoth 6,900-word piece on Goldman Sachs over the weekend contains plenty of fodder for those that see the investment bank as Wall Street’s top dog, as well as those that see it as a creepy, conspiratorial vampire squid of finance.
But the key quote that’s getting attention comes in Goldman Chief Executive Lloyd Blankfein’s exchange with a reporter after a question on whether there should be limits to compensation:
Is it possible to make too much money? “Is it possible to have too much ambition? Is it possible to be too successful?” Blankfein shoots back. “I don’t want people in this firm to think that they have accomplished as much for themselves as they can and go on vacation. As the guardian of the interests of the shareholders and, by the way, for the purposes of society, I’d like them to continue to do what they are doing. I don’t want to put a cap on their ambition. It’s hard for me to argue for a cap on their compensation.”
So, it’s business as usual, then, regardless of whether it makes most people howl at the moon with rage? Goldman Sachs, this pillar of the free market, breeder of super-citizens, object of envy and awe will go on raking it in, getting richer than God? An impish grin spreads across Blankfein’s face. Call him a fat cat who mocks the public. Call him wicked. Call him what you will. He is, he says, just a banker “doing God’s work”
Wow!! Let’s navigate. (more…)
Goldman Sachs ‘Shooting Fish in a Barrel’
Posted by Larry Doyle on November 5th, 2009 9:37 AM |
Those who take risk do not always win. A variety of mathematical models dealing with risk address and negate the chance of almost uniform success by one party. While those on Wall Street would promote the overwhelming risks in the industry, I would maintain that Wall Street circa 2009 is not in the risk business. How so? Let’s review results from the firm regarded as the best at managing risk, that is Goldman Sachs.
The Financial Times provides insights into the Goldman Sachs ‘casino’ in writing this morning, Goldman Benefits From Trading Bonanza:
Traders at Goldman Sachs recorded only one daily loss in the third quarter, highlighting the trading bonanza sweeping Wall Street as central banks continue to pump billions of dollars into the financial system.
The performance – revealed on Wednesday in a regulatory filing – compares with two losing trading days in the previous quarter and confirms that the authorities’ drive to revive markets after the crisis is yielding huge windfalls for some banks.
Before the crisis, banks regularly recorded trading losses on several days in a quarter.
Goldman made more than $100m in profits on 36 of the 65 days in the three months to September and recorded more than $50m in profit on more than eight out of 10 trading days, the filing shows.
To lose money on a total of only three days over the last two quarters defies rules of logic, assuming that markets are free, fair, and balanced. Even in Vegas the house doesn’t win at that rate. The question begs then as to the nature of the supposed risks being taken by Goldman and every other Wall Street firm. Beyond the risks, we also need to question the very nature of the markets themselves. When a firm makes money 98% to 99% of the time, don’t tell me they’re taking risk. They are doing nothing more than ’shooting fish in a barrel.’ How so? (more…)
