Goldman Sachs

money graphics 2008 869180a Taibbi vs. GoldmanMatt Taibbi had me salivating to read his upcoming Rolling Stone article The Great American Bubble Machine” after his promotional appearance on Morning Joe.

If you’re not a Wall Streeter, you don’t like Goldman because of their dominance in both the government and the financial markets. If you are a Wall Streeter, you don’t like Goldmanites because in person they can be kinda stuck up.

Imagine the letdown when I realized that the facts in Taibbi’s article were buried under layers of snark and anger. It wasn’t so much an exposé, but rather an opportunity for Matt Taibbi to vent like a scorned lover. Which leads me to question if Goldman personally screwed Matt and didn’t call the next day.

Goldman is like Mean Girls–or Mean Guys to be more specific. They were the smart cliquish guys on the chess team who also played second string football (while the smart and geeky went to Deutsche Bank, the ones named Chad who wore flipped up collars went to Solomon Smith Barney and Lehman, the rugby and first string footballers went to Bear Stearns, and the second generation Italian guys went to Morgan Stanley).

Love it or hate it, all of these guys are doing their job: making money. Go to any of these offices and you can literally feel them stalking for money in the thick, chilled air. But you can’t say that if you were wealthy, you wouldn’t want someone like that working for you?

And as sickening as it is to admit, they (like many bankers on Wall Street recruited within the past 20 years) are smart. Wouldn’t you want smart people running our government (if it weren’t for the ruthless and unethical parts of their personalities)?

So get angry at these bloodsuckers for their role in past economic bubble bursts. But hold the “parents” in the situation–in particular, the SEC and Treasury–accountable. Aren’t they the ones whose job it is to police the situation? For example, the government now has a mandate to re-regulate Wall Street. Will providing oversight rather than an overhaul really help?

And to Matt Taibbi–rather than pile on the venom directed at Wall Street, how about either 1) not speaking in angry generalities and provide objective specifics a la Washington Post’s Watergate coverage, or 2) calling it commentary and not reporting. Because there are some honest people deep in the brightest corners of Wall Street trying to do good but are being hit by the shrapnel this year.

I still say that the true fix is to break up the cliques and place more women at the top of these organizations. Also make these banks private, and do business in their own niches. More on that in a future post. Snark-free.

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Have you ever wondered what happened behind the scenes after TARP was passed by Congress in late 2008, when TARP money was disbursed to Wall Street banks?

In my first exclusive thewallstreetgeek.com video, we see the nail-biting negotiations between Treasury Secretary Henry “Hank” Paulson, and Goldman Sachs CEO Lloyd Blankfein:

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Ten bailed-out banks were deemed healthy enough to return almost $70B in TARP money to the Treasury:

  • JP Morgan Chase
  • Goldman Sachs
  • Morgan Stanley
  • American Express
  • Capital One
  • US Bancorp
  • Bank of NY Mellon
  • BB&T
  • State Street
  • Northern Trust

Interesting scenario because if I were offered a loan at 5%, I would hang onto it.

Then again, this particular loan had clauses that restricted compensation and allowed government and ultimately public scrutiny over spending patterns. So it’s no surprise that these notoriously private banks treated TARP like a hot potato.

It also doesn’t hurt that an early payback makes these banks look good. Which in turn may bolster their stock prices–an example of fiscal strategy impacting PR.

However, although it appears that the umbilical cord to the government was completely clipped by returning TARP funds, a few of these banks are still receiving government aid. For example:

  1. The Temporary Guarantee Liquidity Program: Among other things, this program supports capital-raising via commercial paper, et al, to help banks maintain their capital requirements and keep their doors open.
  2. TARP Payments from Other TARP Institutions: AIG still has its TARP money. It also still has credit default swaps on its books, and owes payment to counterparties (which can be other banks).

    It’s widely discussed, for example, that Goldman Sachs will receive additional TARP money as the counterparty on AIG derivative contracts. But there’s nothing wrong with that–if you bought an insurance contract and needed it paid out, you would be entitled to receive the payout no matter the source.

It’s a positive step that these banks are returning TARP money. But the recovery isn’t over yet for these banks.

And as a side note, imagine if this returned TARP money were loaned at a low interest rate to consumers with mortgages and credit card debt so that consumers could payback their high interest loans early?

It wouldn’t be completely equitable since it’s our taxpayer money anyway, plus some taxpayers paid more than others. Nevertheless, it would be an offer none of us would probably refuse.

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Goldman Announces Earnings and They Mean Business

by The Wall Street Geek

Goldman Sachs announced much higher than expected profits today. What does that mean? It’s like expecting your child to get a C+ on an exam, but her getting an A+ instead, and with a gold star! But in a period in our economy where the Dow is still down 45% year to date, how did […]

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