It appears that a criminal case is being brought against a 'rogue trader' at Goldman Sachs who was caught obtaining confidential documents from a 'rogue central banker' at the NY Fed. Informed rumour has it that the defendants may condescend to plead guilty to a misdemeanor. Who says that crime doesn't pay?
Q&A on Fed Liftoff
We still expect a rate hike at the December FOMC meeting. The leadership has signaled that such a move is likely if the economy and markets evolve broadly as expected, and our forecast is similar to theirs. However, we are only about 60% confident. Most of the uncertainty relates to the possibility that the economic and market environment—or in a broad sense, “the data”—will be worse than the FOMC’s (and our) expectations....The low market-implied probability of a December hike of only 30%-40% probably reflects a mixture of concerns about the data (which we find reasonable) and a belief among some market participants that the FOMC will find an “excuse” to stay on hold even if the economy does fine (which we find unreasonable). ...
Our own view is that it might make sense to start normalizing in December if we were perfectly confident in our baseline forecast for the economy. But uncertainty around that forecast still argues for waiting longer. The main reason is risk management.
To judge by “Are You Smart Enough to Work at Google?”—which combines anecdotes from current and former employees of Silicon Valley firms, with a potted history of the pop psychology and practice of interviewing, and lots of brainteasers of a sort favoured by interviewers at Google— plenty of firms treat graduate recruitment the way Alfred Hitchcock treated blondes. Inexperienced Tippi Hedrens can be made to squirm. They get asked impossible questions by stony-faced interviewers who offer them no feedback or encouragement, leaving the baffled victims feeling stupid and a little sweaty. This approach is used only on people starting out on their careers, when the power of interviewer over interviewee is at its greatest. By the time candidates have more professional experience they can expect to be treated more like Grace Kelly.Power firms such as Google and Goldman Sachs have their pick of employees just coming out of graduate school, so they make those applying go through hoops to get jobs. Anybody willing to go through all the hoops then tend to be very loyal.
Getting a lot of calls about Jon Corzine [of MF Global] and his relationship with Commodity Futures Trading Commission (CFTC) chairman Gary Gensler.Bottom line: If you create power centers (like the CFTC)the unscrupulous will attempt to influence the power centers. Bernie Madoff was close to the SEC and now this possible Corzine relationship with Gensler.
Both Corzine and Gensler worked at Goldman back in the day, and the word is that Corzine personally lobbied Gensler to delay the implementation of new rules that would have helped prevent Corzine from raiding his own clients' funds.
This whole issue smacks of the improper communications between other former Wall Street co-workers like Hank Paulson and Lloyd Blankfein. More and more, it appears that, as a matter of routine, federal regulators like Paulson (in 2008) and, later, Gensler reach out to old friends on Wall Street to negotiate/discuss the timing and the form of various policy changes, bailouts, and other regulatory matters.
This is one of those issues where there's no point in calling for more regulations. No matter what laws we have, we can't have regulatory heads breezily chatting about their enforcement plans with former co-workers who have huge financial interests resting upon their decisionsBTW, Goldman recruited Gensler hard, when he was getting his MBA at Wharton. Back in 2009, I reported:
A friend who attended Wharton with Gensler tells me he was the smartest student in the class. When Goldman visited the campus the year Gensler graduated, Gensler was the only student that they wanted to talk to.
The biggest bond dealers in the U.S. say the Federal Reserve is poised to start a new round of stimulus, injecting more money into the economy by purchasing mortgage securities instead of Treasuries.Now how the hell could primary dealers, who include Goldman Sachs and other banksters, know this, unless Fed chairman Bernanke and other Fed officials are leaking this information to the favored elite?
Fed Chairman Ben S. Bernanke and his fellow policy makers, who bought $2.3 trillion of Treasury and mortgage-related bonds between 2008 and June, will start another program next quarter, 16 of the 21 primary dealers of U.S. government securities that trade with the central bank said in a Bloomberg News survey last week. The Fed may buy about $545 billion in home-loan debt, based on the median of the 10 firms that provided estimates.
[L]aw is no longer what it was intended to be - a set of rules equally binding everyone to ensure that outcome inequalities are at least legitimate - and instead has become the opposite: a tool used by the politically and financially powerful to entrench their own power and control the society...elites are immunized for egregious crimes while ordinary Americans are subjected to merciless punishment for trivial transgressions.This is the only way to understand how Bernanke can get away with leaking his next moves to the elites, while Rajaratnam gets thrown in prison for what shouldn't even be considered a crime.
Bill Clinton's birthday bash at a rented Hamptons mansion ended in drama after a valuable vase was broken and a neighbor complained about parking.
A source said, "The Clintons know how to party. A large vase in the front entrance was broken, the front lawn and sprinkler system were shredded, and a neighbor complained. The house was rented by Band from women's golf-wear designer Toby Tucker Peters, who was told it would be a small party, but it ended up being over 100 people."...
Guests at the late-August bash included Paul McCartney, Jimmy Buffett, Pete Peterson, Matt Lauer, Lloyd Blankfein, Christie Brinkley, Katie Couric, Barbara Walters...
This is a prediction that is going to come back and haunt me, but I think that Goldman Sachs is doomed. I don’t think that in its current form it can survive. We could be looking at four to five years, but the proprietary activities will split off, those people will end up in their own hedge fund – that is if new regulation doesn’t forbid it anyway...Their relationships with customers on every front are poisoned, and they can’t function as an investment consultant if they have this problem of honesty.
Beset by civil fraud charges, a criminal investigation, a sagging stock price and a severely tarnished image, Wall Street's most profitable firm has weighed putting its CEO, Lloyd Blankfein, on the famed talker's couch in an attempt to humanize the company and buff its image.Oprah would eat Blankfein alive. This is not what I had in mind when I was thinking non-financial.
The out-of-left-field idea -- which was considered months ago but now deemed unlikely -- would have been part of the 141-year-old partnership's first-ever mass advertising campaign.
"There are [Goldman executives] who think we should go on 'Oprah,'" Goldman Sachs European media chief Fiona Laffan told a meeting of communications industry professionals in London. "I'm not one of them."
Goldman Sachs has decided to keep a low profile in response to harsh criticism and a subpoena fired at the company by the Financial Crisis Inquiry Commission yesterday.Given that CEO Lloyd Blankfein is tone deaf when it comes to speaking in public, to a degree this new strategy makes sense. There should be no direct challenges to the FCIC. When Blankfein testifies, he should be totally polite and go totally technical. If he doesn't have the skilz to get his point across during testimony, in a manner that will resonate positively with the general public, he should go completely polysyllabic and use as much technical jargon as possible. No one should understand what he is saying. Boring everyone to death should be his goal.
On a conference call with reporters following the announcement of the subpoena, the chairman of the commission, Phil Angelides, angrily accused Goldman of “deliberately and disruptively” trying to thwart the commission’s investigation by dumping billions of pages of documents in response to requests for information.
Goldman offered up only the blandest and most tepid denial. "We have been and continue to be committed to providing the FCIC with the information they have requested," Goldman said in a statement.
Goldman is deliberately under-reacting to the public pillorying served up by Angelides, a person familiar with the thinking at Goldman says.
Consider Buffett’s $5 billion investment in Goldman Sachs in September 2008. On the surface, it made a lot of sense. First, the news of such an investment could help put an end to the post-Lehman carnage on Wall Street. It did. And second, he had the storied firm over a barrel, extracting a juicy 10 percent coupon on the preferred shares they created for him in their moment of need.Buffett was a lot straighter guy before he started hanging around with the Washington Post's Kay Graham. She's the one that introduced him to the Washington crowd, and brought out the D.C. type opportunism buried in his personality.
He’d made this play before: He invested in Salomon Brothers in 1987 when the firm was on the run from Ron Perelman (things later got so hairy that Buffett had to step in and run the Salomon temporarily, an experience he termed “far from fun”). But with Goldman, it’s pretty clear who got the better of whom. Buffett got his 10 percent, sure. But Goldman rented the credibility of the world’s most reputable investor for a relative song—what’s $500 million a year in exchange for one’s continued existence? He even defended of the firm’s practices earlier last month, when the Goldman pile-on was in full force. (Perhaps it was mere respect. They got him; therefore they must be good. If you can dunk on LeBron …) But let’s not get too complicated. Untie it all, and it’s pretty simple: As one of Goldman’s largest investors, Buffett is, de facto, Goldman.
The Wall Street Journal reported on April 26 that Buffett was lobbying Nebraska senator Ben Nelson to grandfather Berkshire and its $63 billion derivatives portfolio from any new rules, specifically those that might force the company to reserve collateral to cover potential losses. Recall that this is the guy who called derivatives “financial weapons of mass destruction.” But they’re only dangerous, apparently, in lesser people’s hands. (The great Buffett? Posting collateral? How dare they.) Some of Buffett’s derivatives positions are outright bets on the direction of the market, the kind that can suddenly be worth nothing if he’s wrong. In other words, gambling. With shareholder money. Now where have we heard of that before?
Perhaps most damning to his cultivated image of being above it all is the fact that until last year, Berkshire Hathaway was the largest shareholder of rating agency Moody’s Investors Service, with a full 20 percent stake. It’s hard to think of any market participant that fell down harder on the job during the late housing bubble than the rating agencies, all in pursuit of the growing stream of fees from investment banks demanding that they put lipstick on their subprime pigs. Moody’s surpassed $73 a share in early 2007; it’s around $21 now. And yet, Buffett’s reputation took no similar hit.
The question is if it should have. Look beyond Buffett’s old-timey outsider shtick, the circus of an annual meeting, the notion that all he does is drink Cherry Coke and play online bridge with Bill Gates, and he’s just another Wall Streeter. Like any rational being, Buffett went where the money was (Moody’s), bought on the cheap (Goldman), and tried to protect his own interests (lobbying against derivatives reform.) Just like the rest of them. Only he’s better at it than they are.
“Obama later told a friend that the angriest he got as president in his first year was when he heard [CEO Lloyd] Blankfein” justify his compensation by saying “that Goldman [Sachs] was never in danger of collapse. That was flatly untrue,” Obama said.Keep in mind that this book is written by the Obama friendly Adler and was likely an attempt to boost Obama's anti-Goldman creds. What Obama says about Goldman is true but, "Lip-Syncing Capitalism" is exactly what the President does also, with much more serious consequences for us all.
“‘Let me get this straight,’ the president said.… ‘They’re now saying that they deserve big bonuses because they’re making money again. But they’re making money because they’ve got government guarantees….
“‘These guys want to be paid like rock stars when all they’re doing is lip-syncing capitalism.’ “
Despite the running unease in world markets, three giants of American finance managed to make money from trading every single day during the first three months of the year.What really needs to be looked at is how much of these trading profits were made with the Federal Reserve being on the opposite side of the trades.
Their remarkable 61-day streak is one for the record books. Perfect trading quarters on Wall Street are about as rare as perfect games in Major League Baseball...But Bank of America, Goldman Sachs and JPMorgan Chase & Company produced the equivalent of a trio of perfect games during the first quarter. Each one finished the period without losing money for even one day.
