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HomeGoldman’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…)
Volcker Rule Gains Support of Former Treasury Secretaries
Posted by Larry Doyle on February 22nd, 2010 3:59 PM |
Score major points for former Fed Chair Paul Volcker in his pursuit to restructure Wall Street. How so?
A letter in this morning’s Wall Street Journal from five former Treasury Secretaries endorses Volcker’s proposal to limit proprietary trading activities in our largest banks. The letter reads,
We who have served as secretary of the Treasury in both Republican and Democratic administrations write in support of the proposed legislation to prohibit certain proprietary activities of commercial banking organizations—the so-called Volcker rule, as part of needed financial reform (“It’s Time for Financial Reform Plan C,” by Alan Blinder, op-ed, Feb. 16).
The principle can be simply stated. Banks benefiting from public support by means of access to the Federal Reserve and FDIC insurance should not engage in essentially speculative activity unrelated to essential bank services. (more…)
Paul Volcker Talks ‘Sense on Cents’
Posted by Larry Doyle on February 13th, 2010 2:52 PM |
Paul Volcker
What will the future of Wall Street hold? No man is attracting more attention regarding that very question than former Fed Chair Paul Volcker. What might the Volcker Rule mean for Wall Street? For those with an interest in the global economy and markets, Volcker provided an extensive interview recently to the Financial Times.
In this interview, the former Fed chair talks more ‘sense on cents’ than anybody I have come across since launching this blog a year ago. I STRONGLY recommend reading it and saving it. Volcker’s interview will serve as a fabulous reference map as we collectively navigate our economic landscape.
Paul Volcker is seen as one of the wise men of American public life. As chairman of the Federal Reserve under Presidents Jimmy Carter and Ronald Reagan he subdued inflation, for which he is lauded today, although it was controversial at the time. After President Obama’s election, Mr Volcker was made chairman of the President’s Economic Recovery Advisory Board, a position which initially seemed largely ceremonial. But Mr Volcker returned to the centre of financial and economic debate last month when Mr Obama endorsed his proposed separation of commercial banking and proprietary trading, a plan dubbed the “Volcker Rule”. (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…)
How Tim Geithner Screwed the American Taxpayer
Posted by Larry Doyle on January 7th, 2010 9:31 AM |
Tim Geithner, then head of the New York Fed, blinked and screwed the American taxpayer out of billions of dollars in the process. How so?
Geithner and his cronies in Washington have misrepresented–if not outright lied–about the payments to both domestic and foreign banks in settling exposures to then failing AIG. While politicians and pundits alike will reference the precarious nature of the time and heat of the moment to defend Geithner and his cronies, the simple fact is the settlement of the AIG swaps at 100 cents on the dollar was nothing short of one of the greatest heists in our country’s history.
This heist transferred multiple billions of dollars from the American taxpayer to the likes of Goldman Sachs, JP Morgan, Societe Generale, and many more domestic and foreign banks as well. (more…)
What’s Fueling America’s Rage?
Posted by Larry Doyle on November 20th, 2009 10:56 AM |
What is fueling America’s populist rage?
Is it the unemployment situation? Is it the volatility in the markets? The weakening greenback? Perhaps the generally perceived level of incompetence amongst our political and corporate leaders? Is it a media that does not hold our public officials and corporate leaders accountable?
While I could write extensively – and I have – on each of these questions, I am firmly convinced the ever increasing levels of populist rage go much deeper than any of these questions. How deep? To the very core of this great nation. What is at the core of any individual, institution, or nation?
Honesty and integrity.
Americans are a strong people. America is a proud land. That said, I believe we have allowed a semblance of moral decay to increasingly infiltrate our very core and we are now paying the price for it. How is this growing moral decay exemplified?
I am not suggesting that those who might hold differing opinions than mine on specific questions addressing ethical and moral topics as being the root of our current problems. I would like to think I am not so narrow-minded or judgmental. I do believe, however, that the rage sweeping our country on both sides of the political aisle stems from the reality that Americans are increasingly convinced that our political representatives, government officials, financial leaders, and their selected constituents have not been honest with America. (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…)
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…)
