Category Archives: Goldman Sachs
O’Neill last week wrote a long farewell letter (he’s been moved to Goldman Sachs Asset Management, also the presumed new post-Dodd-Frank home of Goldman’s prop traders), using the anniversary of 9/11 as occasion to reflect on his changed professional status.
Was O’Neill moved by the memory of 9/11 to reflect upon the meaningless of wealth and profit compared to life, good health, and family? Did he look back at all that death and suffering and find himself moved to silent reflection?
Nah. What O’Neill did instead was look back at 9/11 and recall that that was the event that led him to make his famous “BRIC” call — a prediction that in the wake of 9/11 the economic influence of the United States would wane and emerging nations like Brazil, Russia, India and China would rise to take its place. O’Neill’s BRIC theory became the cornerstone of Goldman’s economic policy last decade. It worked out well for them. It was, as O’Neill, a Brit, would say — a good show! It was the righteousness of this prediction that O’Neill chose to remember on the anniversary of 9/11:
1. 9/11 and the state of the world. As many of you probably know, the atrocity of that day was one of the key forces that led me to conceive of the BRIC theme. Through its horror, it suggested to me that for globalization and the world economy to thrive, we all needed to accept a world in which different social and political philosophies could sit side by side. Luckily, and despite the staggering challenges we have been through since, by and large, that seems to be the case. Of course, as much as many negatively inclined commentators allude to the poor performance of the major economies and major markets, since 9 years ago, many emerging markets, led by the BRIC nations, have enjoyed spectacular rallies.
I still wonder why most of these fuckers aren’t wearing prison orange…I really do. The fact that he brags on how well all ‘the markets’ have done since the original 9/11 really takes a big set of brass ones.
The German government said Saturday that it is considering taking legal action against Goldman, Sachs & Co. [corporate website] for defrauding investors, according to a report [text, in German] by the German newspaper Welt am Sonntag. The announcement comes just a day after the US Securities and Exchange Commission (SEC) [official website] filed a civil suit [complaint, PDF; JURIST report] on alleging securities fraud against the bank. German government spokesperson Ulrich Wilheim said that the German Federal Financial Supervisory Authority (BaFin) [official website] will request information from the SEC to decide whether to file a suit. Britain has indicated that it may also pursue legal action [Bloomberg report] after it found out the scope of the allegations contained in the SEC lawsuit.
The SEC complaint, filed in the US District Court for the Southern District of New York [official website], alleges that Goldman made misleading statements and omissions to investors in early 2007 in violation of the Securities Act of 1933 [text, PDF] and Securities Exchange Act of 1934 [text, PDF]. Goldman’s alleged conduct in marketing collateralized debt obligations (CDOs) [Investopedia backgrounder] to investors lies at the core of the controversy. Goldman responded [press release] to the allegations by denying all wrongdoing. The SEC is seeking “injunctive relief, disgorgement of profits, prejudgment interest, civil penalties and other appropriate and necessary equitable relief from both defendants,” remedies considered appropriate in securities fraud cases.
I really hope their troubles have just started. Frog march, in prison orange, every single prick of the GS executive branch and that pig that headed up the hedge fund that made billions off the misery of others.
From the NYT we learn the rules have changed again:
Announced without fanfare on Sunday night, the move signals the final end to the Glass-Steagall Act, the epochal legislation of 1933 that signaled a split between investment banks and retail banks. A law passed in 1999 repealed the earlier regulation, though Goldman and Morgan remained independent investment banks.
Morgan Stanley had sought other ways to bolster its capital, and had been in advanced talks with China’s sovereign wealth fund and others about raising as much as $30 billion, people briefed on the matter said Sunday night.
By becoming bank holding companies, Goldman Sachs and Morgan Stanley gained some breathing room in the immediate term. But it likely lays the groundwork for additional deal making. Given the expected bank failures this year, it is possible Goldman and Morgan Stanley could seek to buy them cheaply in a “roll-up” strategy.
Prior to the move, federal regulations prohibited the two investment banks from pursuing such deals. Indeed, Morgan Stanley’s recent talks with Wachovia revolved around Wachovia buying Morgan Stanley.
Being a bank holding company would also give the two access to the discount window of the Federal Reserve. While they have had access to Fed lending facilities in recent months, regulators had planned to take away discount window access in January.
The regulation by the Federal Reserve brings a host of accounting rule changes that should benefit the two banks in the current environment.
In return, they will submit themselves to greater regulation, including limits on the amount of debt they can take on. When it collapsed, Lehman had about a 30:1 debt-to-equity ratio, meaning it had borrowed $30 for every dollar in capital it held. Morgan Stanley currently has a debt-to-equity ratio of 30:1, while Goldman Sachs has one of about 22:1.
Bank of America, on the other hand, currently has about an 11:1 leverage ratio, while JPMorgan has about 13:1 and Citigroup about 15:1. Because they can borrow less, bank holding companies typically have lower earnings multiples.
More regulation is good, just depends on who the hell is doing it. The EPA in it’s present form sucks ass, as an example of a worthless governmental agency that was designed to watchdog our air, water and natural resources.
The next President is saddled with a real friggin mess..new regulations will have to be crafted and you know the lobbyists will be there every inch of the way. Bush has already seen to it the next President can’t change any of the current bailouts. Bailouts rumored to be up to a Trillion large…
I got a headache from this horseshit.