From Barry Ritholtz's blog:
http://www.ritholtz.com/blog/2010/05/gs-seeks-to-…
Forget the settlement, I want to know this: Who was the dipshit lawyer that advised Goldman Sachs to fight this tooth and nail? Was it some executive who simply charged ahead, Dick Fuld style? I’d like to know who totally failed to anticipate the political climate, the public reaction, the prosecutors attitude, and myriad factors that has turned this into a giant disaster. Even if GS were to prevail in court, they have already lost. The reputational damage is already measured in $ billions, and will last years if not decades.
Has GS really taken a hit in the corporate environment? Are businesses/wealthy individuals/sophisticated investors less likely to use Goldman for services because of what happened?
Sure, there's been a lot of public backlash by politicians and the general public, but most of these individuals are more misinformed than not (i.e. they developed their opinions based on a few articles they read on CNN.com or watched on TV) and will most likely never use GS's services anyways.
If anything, I think this will be like the Audi scare back in the 1980s - short-lived impact but no significant reputation loss.
Maybe I'm way off base here.
Wouldn't be too sure about that:
http://www.nytimes.com/2010/05/19/business/19client.html?pagewanted=1&hp
And now even employees are getting happy feet:
http://new.wincountry.com/news/articles/2010/may/26/spotlight-on-goldma…
I'm really wondering how the hell Lloyd still has a job...
I thought the hearings were a joke. Any one who is business fluent could tell that those senators didn't know what the hell they were talking about...
Are you under the impression they ever know what they're talking about? Or need to demonstrate any bit of competence in order to fuck shit up?
It was pretty obvious they would settle this ASAP.
If this would have gone to court, through the discovery process there would have been so much shit dug up on GS it was seriously demolish their "our shit dont stink like everyone else's" brand. I've seen so many e-mails through restructuring court proceeding where MD and VP and Group Heads are e-mailing the dumbest shit to each other.
Its just human nature. You poke fun at the man and make statements that often undermine your clients and the products you sell them. I've seen people putting shit in writing most of you wouldn't even believe if I told you. Fab whatever-the-fuck-his-name-is was nothing, neither was the guy saying "Man that was one shitty deal".
It would have been an EXTREMELY bad situation for Goldman Sachs and Wall Street on the whole. In fact, if GS didn't settle, I would bet my bottom dollar that the other banks would be pressuring them to settle because of all the dust that would have been kicked up from 200 West. It would have fired up a fuckin blast furnace of politicians looking to make a name for themselves by going after banks.
What I don't understand is why they didn't settle it before it ever even came to light. The feds gave them the opportunity before charges were filed.
Hubris is the answer I keep coming back to.
It would have come to light regardless. Even with a pre-public settlement, it (the e-mails) would have been leaked. The settlement would have been made public regardless because of public disclosure requirements. But likely it would have been a line in the SEC Filing like "Goldman Sachs has, without admitting guilt, settled a dispute with the SEC arising from certain dealings of the Structured Products Desk in 2008. The settlement was made purely to avoid additional distractions for Goldman Sachs team member so we can continue serving our clients in the same tireless efforts we always have. We continue to uphold our core business principles of doing God's work."
Likely the Feds didn't have as much damaging info at that point in time. Then they collected more and flexed their muscle as in a "there's more where this came from" fashion for the dual purpose of encouraging a settlement and public chastisement.
$621 million sound about right?
http://www.crainsnewyork.com/article/20100527/FREE/100529849#
The price is right. Some might suggest that this is too small a fine but I think there is a very fine line of right vs. wrong here.
Why is Barry so sure that the SEC would have wanted to settle even if Goldman had offered to do so immediately? A lot of people (or at least a bunch of the people around me, admittedly a biased crowd) feel that the SEC's accusations quite conveniently spurred national another wave of hatred for the banks that helped push through the passage of the financial regulatory reform bill. Depending on the bill's final form, the greatest damage to Goldman may not even be this lawsuit, but the restrictive environment that the bill could create for banks to operate in going forward.
The SEC's damaged reputation also benefited from a more prolonged confrontation. They've been cracking down here and there since the new regime was installed, but this episode has won the commission huge public kudos and could really improve its public perception.
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