Monday, October 27, 2008

Goldman Approached Citigroup About Reverse Merger

FT has the details:

Lloyd Blankfein, Goldman Sachs’ chief executive, called Vikram Pandit, his Citigroup counterpart, last month to discuss a merger, in a dramatic example of the secret manoeuvring that preceded the government bail-out of the financial sector.

The call, which was made at the tentative suggestion of the regulatory authorities or at least with their blessing, was made shortly after Goldman had won surprise approval to convert itself from a securities firm into a commercial bank on September 21, according to several people familiar with the events.

They added that the conversation was brief as Mr Pandit rejected the proposal at once.

[Technically, for regulatory reasons]a deal would have been structured as a Citi takeover of Goldman.

Made at the suggestion of regulatory authorities? Hmmm, that would be former Goldman man Hank Paulson.


  1. “Made at the suggestion of regulatory authorities? Hmmm, that would be former Goldman man Hank Paulson.”

    The same Hank Paulson who signed off on the overnight transformation of Goldman Sachs from an Investment Bank to a Commercial Bank. I wonder how many laws, rules and procedures the Treasury broke, bent or ignored to allow this to happen?

    I can’t imagine that there is not some Treasury rule which says that any corporation wanting Commercial Bank status would be required to provide a complete accounting of its assets to show that it was solvent. And I doubt if Goldman Sachs could come up with accounts that showed that it’s assets out weight its debts


  2. Well said, DJ. Well said.

  3. Looks like our favorite banker is going to jump into Carbon Credits, I wonder if they will do for them what they did for RE, slice, dice, leverage and maybe even the new CDS (Carbon Default Swaps)?

    Street Cred: Goldman Sachs Buys Into Carbon-Credit Developer

    Jonathan Shieber, of Dow Jones’ Clean Technology Insight, reports:
    It looks like the financial wizards at Goldman Sachs are betting that the U.S. government is going to impose a cap-and-trade system for global-warming emissions sooner rather than later, despite the financial crisis shaking up the corridors of power from Wall Street to Washington.

    Goldman is announcing today that it will partner with Salt Lake City-based carbon-offset project developer Blue Source LLC. The company, backed by big-time private equity investors First Reserve Corp. and Och Ziff Capital Management Group, sells carbon credits. Neither Goldman Sachs or Blue Source would comment on the size of the investment, other than to say that Goldman would receive a minority stake in the company.

    Continued at link