Monday, January 25, 2010

Are the Long Knives Out for Lloyd Blankfein?

For the first time, ever, I am hearing serious grumbling inside Goldman Sachs about Lloyd Blankfein's leadership of the firm.

The grumbling is at high levels, but it is unclear as to how widespread the view is.

Specifically, the grumbling centers around Blankfein's public positioning of the firm and his handling of the Obama administration. The thinking is that Blankfein came off as an arrogant buffoon when he made his statement to FT that Goldman was doing "God's work."

These insiders also believe that President Obama's recent hardline attitude on investment banks, although it is somewhat driven by political posturing, is also directed specifically at Goldman as a result of Blankfein's failure to show up in person at a meeting the President called that was scheduled for the White House.

Blankfein participated by conference call after his plane was delayed in NYC because of ground fog in Washington D.C. Says one insider, "Jamie Dimon made it to the meeting. He did what you are supposed to do, fly in the night before for an early morning meeting with the President. We know Obama is pissed at us because of this and now all our inside contacts mean sh@# if you are in the dog house of the President, and it's all Blankfein's fault"

The proposed new taxes on Goldman, the new regulations and the cutback in bonuses could have all been avoided some insiders think if Goldman's public perception of the firm and it's relationship with the White House were different, and they place the blame directly on Blankfein

1 comment:

  1. The commission is headed by Phil Angelides who said that part of the commission's aim is to "make this a story that's not just academic but a real story" that describes "the actions of individuals and institutions," the Wall Street Journal reported.

    The commission intends to use subpoena powers to obtain information from both the private and public sectors about the details of the meltdown to add to its bite.

    Without identifying the specific areas of inquiry, Angelides told the WSJ the Commission is looking at 10 to 12 "specific practices at specific institutions." The commission would look at pay, subprime lending, securitization practices and other issues.

    I cannot emphasize enough the role of "naked short sales" and "short sales" against those institutions that collapsed such as Bear Stearns, Merrill Lynch, Washington Mutual, Lehman Brothers, etc. For example, what was the effect of 32.8 million "naked short sales" against Lehman before it collapsed? If the commission fails to investigate this matter and those responsible, it will be mysteriously delinquent.

    While it seems that 'so far, so good,' let's hope that the commission does not end up with just a "story." The American people want justice done. That means trying and convicting those responsible if necessary. The damage done to the U.S. by a handful of bankers is of such magnitude that it cannot be washed under the rug as 17 million are unemployed as a consequence of the bankers' reckless greed and speculation.