Goldman: Pro-reform

[strategy 4]

http://www.washingtonexaminer.com/opinion/..._-90957879.html

In his self-styled war against Wall Street, President Obama appears to have a powerful ally: Goldman Sachs.The nation's largest investment bank, famously cozy with top government officials in both parties, has tipped its hand to its shareholders, indicating that major financial "reform" proposals will help Goldman's bottom line."Given that much of the financial contagion was fueled by uncertainty about counterparties' balance sheets," Goldman Chief Executive Officer Lloyd Blankfein and President Gary Cohn wrote in a letter at the beginning of the annual report, "we support measures that would require higher capital and liquidity levels, as well as the use of clearinghouses for standardized derivative transactions."Goldman's executives are calling for two regulations here. First, they want the federal government to restrict free-wheeling, heavily leveraged, high-stakes financial risk taking. Second, they want government to set more rules of the road for trading derivatives -- financial products that are often complex.These are the very "fat cats" to whom Obama directed his trash talk in January: "If they want a fight, that's a fight I'm willing to have." Well, it looks like they don't really want a fight. It looks like they want more regulation. The question is: What's in it for Goldman?If you take Blankfein and Cohn's word, stricter federal liquidity and capital requirements would amount to regulators doing Goldman's work for Goldman. They want Uncle Sam to mitigate "uncertainty about counterparties' balance sheets." That is, they want the government to reduce the risk that Goldman's debtors or insurers will run into trouble.This is an odd function of government: Making Goldman Sachs feel safer in its business dealings. Blogger Ira Stoll, at his Web site The Future of Capitalism, put it well:"It's one thing for some elderly retail depositor to ask the FDIC to protect her from risk by guaranteeing bank deposits. But the idea that the government needs to run around setting capital requirements to protect Blankfein and Cohn from the risk that their counterparties might go under or get in a liquidity crunch seems a bit odd. Let them protect themselves."Also at play in Goldman's call for stricter capital requirements and standardization of derivatives: the confidence game. Much of America has lost some faith in the markets. Regular investors are still a bit scared of the stock market. Financial firms are lending less. Goldman thrives on free-flowing capital.If Obama signs a financial "reform" and declares that it now safe to enter the waters of the stock market, that's good news for Goldman.Restoring public confidence in the markets should be the job of those who profit from your investing in the market -- it should not be the job of the federal government.Another pillar of Obama's financial reform is the "Volcker Rule," which would restrict the trading banks can do. Blankfein and Cohn, in their letter, indicate to shareholders that this rule will be no big deal for them.The Volcker Rule would bar "proprietary trading" by Goldman (that is trading simply to benefit Goldman's bottom line) but would not restrict dealings "related to" serving the bank's clients. But even Goldman's most notorious financial dealings, transactions with failed insurance giant AIG, were client-related, Goldman told shareholders: "The net risk we were exposed to," Blankfein and Cohn wrote, "was consistent with our role as a market intermediary rather than a proprietary market participant."In other words, almost any deal Goldman would make could be tied to a client, meaning the Volcker Rule couldn't touch Goldman, even if it cramps the style of smaller, less well-connected banks.Goldman is lobbying hard on financial regulation, but that doesn't mean they're lobbying "against" regulation. And they certainly shouldn't be considered White House foes: Goldman was Obama's No. 1 corporate source of funds in 2008.So when Obama triumphantly signs his "reform" later this year, forget the rhetoric and watch the smart money -- it'll be betting on Goldman.

They kinda got annihilated today over some fraud. You can read about that here:http://online.wsj.com/article/SB1000142405...wsreel_businessNot too long after the news broke, mk said some trading in other areas for the last few days hinted that goldman knew they were going to get sued. He's looking pretty smart right now...http://www.businessweek.com/news/2010-04-1...t-update1-.htmlIt's entirely possible that goldman played today's move well enough to cover the losses from the settlement. I really doubt the cost will surpass the $12 billion in market cap they lost in trading today.

[hblask 1]

I'm sure it's totally unrelated to this. One thing about Obama, when you buy him you buy him good:Goldman record contribution to ObamaPresident Obama has portrayed himself as the scourge of Wall Street, but that's not how Goldman Sachs's employees and executives saw in in 2008. In his successful White House bid, Obama had no better source of funds: He raised $996,595 from people identifying Goldman as their employer. Let's put that number in perspective:

• It's the most any politician has raised from a single company since campaign finance reform.
• It was four times what John McCain raised from Goldman.
• It's more than the combined Goldman Sachs total of every Republican in 2008 running for President, House, and Senate.

[Balloon guy 158]

I'm sure it's totally unrelated to this. One thing about Obama, when you buy him you buy him good:Goldman record contribution to ObamaPresident Obama has portrayed himself as the scourge of Wall Street, but that's not how Goldman Sachs's employees and executives saw in in 2008. In his successful White House bid, Obama had no better source of funds: He raised $996,595 from people identifying Goldman as their employer. Let's put that number in perspective:

• It's the most any politician has raised from a single company since campaign finance reform.
• It was four times what John McCain raised from Goldman.
• It's more than the combined Goldman Sachs total of every Republican in 2008 running for President, House, and Senate.

Guess it wasn't enough

[strategy 4]

Tourre, the only individual named in the SEC case, was “principally responsible” for creating and marketing the CDO known as Abacus 2007-AC1, the agency said in its complaint.“The whole building is about to collapse anytime now,” Tourre wrote to a friend in a January 2007 e-mail, according to the complaint. “Only potential survivor, the fabulous Fab... standing in the middle of all these complex, highly leveraged, exotic trades he created without necessarily understanding all of the implications of those monstruosities!!!” http://www.bloomberg.com/apps/news?pid=206...3FKoY&pos=1

[Balloon guy 158]

Tourre, the only individual named in the SEC case, was “principally responsible” for creating and marketing the CDO known as Abacus 2007-AC1, the agency said in its complaint.“The whole building is about to collapse anytime now,” Tourre wrote to a friend in a January 2007 e-mail, according to the complaint. “Only potential survivor, the fabulous Fab... standing in the middle of all these complex, highly leveraged, exotic trades he created without necessarily understanding all of the implications of those monstruosities!!!” http://www.bloomberg.com/apps/news?pid=206...3FKoY&pos=1

I don't know much about this, just had a dinner guest tell me about the book he just read The Greatest Trade Ever: The Behind-the-Scenes Story of How John Paulson Defied Wall Street and Made Financial History and it seems that Paulson went to GS and said: "Hey I have shorted everything I can, how about creating a new fund that is a mirror where you only use the worst loans there are and I will short the fund at the maximum rate you want?" And GS did because they get the interest on the short.If that is the case, what is illegal? I mean it was stupid for GS to do, but is it illegal to be stupid? If it is than we need to arrest 64,385,746 people from the last presidential election.

[strategy 4]

as far as I know, that is accurate. I don't know for sure what goldman's profit or loss was, though I've heard they lost $90m on the trade and only recouped $15m in fees from customers. They front ran the market before the news of them getting sued broke, so I bet they did okay.I went long GS the morning this all came out... got in at 157. I think it's a good position, will probably keep it for a while. Like I said, they lost $12 billion in market capitalization over it. I just can't see them getting hurt THAT badly.re: illegal. it sounds like fraud to me, but there's so much complexity here. I bet they settle out of court.

[hblask 1]

Guess it wasn't enough

They will send a few scapegoats to the slaughter for political coverage, and then get a law passed behind closed doors that guarantees billions in extra profit. Already the reforms are putting the likes of GS into "permanent bailout status" -- so they can take all the risks they want and never lose a dime. That's what a million buys you.

[strategy 4]

One of my investments professors devoted a lecture to lawsuits concerning trading. He talked about how the run of the mill options work that has to be done to manage a big ugly list of positions (like you find in Goldman's huge diverse line of products) can result in some unpopular positions. Combine this with the fact that anyone who makes a substantial sum of money is going to see lots of litigation over just about anything and you get a lot of instances where lawyers spend time deceiving juries full of people who (rightfully) don't understand the issue at hand. Generally the litigation comes about when a hedge fund loses money on a trade and an investor takes exception, maybe feels it could have been avoided. So I guess it bothers me a little to see all the articles claiming "Goldman emails show traders cheering the housing decline." They had a long exposure to the mortgage market that was bleeding badly, hedged it, then ratcheted up the volume on the short side when it became apparent that that market was collapsing. Lost in all of the anti-Goldman rhetoric is the fact that they lost substantial sums of money in the mortgage market leading up to 2007 and then lost $1.7 billion in 2008, wiping what they'd accumulated with their short positions.http://www.independent.co.uk/news/business...ck-1954286.htmlTarget them for trading on private information leaked by Washington, not this tired killing the messenger BS re: the mortgage market collapse. Or, even better, target instruments like knockout options, which force massive pissing matches that distort commodity pricing for short periods of time and run completely contrary to the purpose of those markets.http://www.investopedia.com/terms/k/knock-outoption.aspAnd here's some more information on how they went from long to short between 06 and 07.http://seminal.firedoglake.com/diary/41864(yeah, I'm losing money on my GS position)

[mk 11]

highly recommend everyone take a look at those emails they released. really a good laugh.the cliffs of one exchange would be:fixed/fx higher up1:hi, the desk is up 30-35 million todayprobably more general higher higher up1:nice day [this is a direct quote][time passes]probably more general higher higher up1:wait, shouldn't we be up way more after these ratings agency downgrades?fixed/fx higher up1:yeah, once a few more things go through it'll be totally sweet as opposed to 30-35mm in one day sweet.probably more general higher higher up1:sounds like we should make some serious money [direct quote again]fixed/fx higher up1:yes we are well positioned [direct quote][high fives]

[Speedy Petey 0]

The Obama administration is in bed with Goldman Sachs. Several former Goldman execs are in the administration. Huge contributions to the Obama campaign. Obama was instrumental, before becoming pres, in getting funds from the Joyce Foundation to a an entity called the Chicago Carbon Exchange. A company that will make billions if cap and trade is passed. Guess who was allowed to buy in and owns a nice stake? Goldman Sachs. Guess who who wants in to buy more? Goldman Sachs. Goldman agreed to be beat up a bit in front of Congress to help Obama look good and enact financial reform, which will actually help Wall Street get richer, so they can get a bigger piece of CCX. It is all business and corruption.

[CaneBrain 95]

Harry Reid says the Republicans need to stop "making love to Wall Street".Politics can be funny.

[mk 11]

The Obama administration is in bed with Goldman Sachs.

wait, are you saying business and politics are: INTERCONNECTED?

[strategy 4]

http://www.reuters.com/article/topNews/idUSTRE6455ZG20100506So they're saying the massive crash was algos + an erroneous trade involving PG. you can see it in PG's chart for today, for whatever that's worth. I guess I don't understand why they use these disruptions to call for algo reform/regulations.

[strategy 4]

[Balloon guy 158]

Pretty sure we are on the downhill slide now for this country's future.I mean Senator Franken????The only thing left is to declare Obama divine and demand that he be worshiped.I mean the rest of us, not just you democrats..

[strategy 4]

Pretty sure we are on the downhill slide now for this country's future.I mean Senator Franken????The only thing left is to declare Obama divine and demand that he be worshiped.I mean the rest of us, not just you democrats..

if the republicans could ever present an argument that effectively, I would happily support them again. alas, franken wins the day...

[Balloon guy 158]

if the republicans could ever present an argument that effectively, I would happily support them again. alas, franken wins the day...

Can't argue that the republicans are the worst when it comes to talking.

[LongLiveYorke 38]

Ha!

[hblask 1]

I saw this clip, and thought it appropriate that the most cartoonish senator would spend time on the floor of the senate explaining a cartoon.

[LongLiveYorke 38]

I saw this clip, and thought it appropriate that the most cartoonish senator would spend time on the floor of the senate explaining a cartoon.

Yeah, it'd be way better if Franken were a lawyer, we need more of them in congress.

[hblask 1]

Yeah, it'd be way better if Franken were a lawyer, we need more of them in congress.

He'd still be a cartoonish parody of a human even if he were a lawyer.(And yes, I'm just being difficult. He's actually done a couple things I like, like embarrassing the R's on the contractor rape thing. But his bad stuff is just embarrassing, among the worst in all of congress.)

[strategy 4]

He'd still be a cartoonish parody of a human even if he were a lawyer.(And yes, I'm just being difficult. He's actually done a couple things I like, like embarrassing the R's on the contractor rape thing. But his bad stuff is just embarrassing, among the worst in all of congress.)

his Duluth shilling was pretty cartoonish

btw love the whoring for fiber. gooooo al!