Big story hit this Monday night with news of Goldman CEO Lloyd Blankfein hiring a high powered D.C. attorney. Not to sound like an alarmist, but when you go out and hire one the best attorneys money can buy, something probably isn't going well. CNBCs John Carney said this of the situation:
If Blankfein hired him in a personal capacity, it means that his interests and Goldman's have diverged. That's bad news for one of them
My guess is both of them. Goldman's stock has already taken a downturn and is expected to drop even more tomorrow amidst rumors of wrongdoing in the same short selling case that has been investigated since April. What do you guys think; will Goldman try and cauterize their wound by removing Blankfein or do you think they'll let him try and right the ship?
I think their business model is a little outdated. Under the Blankfein regime (which was perfectly suited for the 90s and 2000s, a very aggressive, charging, aggrandizing, hungry, assertive mantra that matched perfectly to the largely uninterrupted bull market after the dot com bubble) they've had a tremendous amount of success ... but in the aftermath of the financial crisis and how their name has subsequently been dragged through the mud (litigation, federal investigation, loss of reputation, anger on Main Street) constantly since '08, I think we're seeing a bit of a paradigm shift.
This news seems to reinforce that. God's work really is being done.
Dont talk about Yeshua like that!
lloyd better start wearing the buttplug now to prepare....
I think Bank of America is done. Shouldn't we be a little more focused on that?
Agree barboon, something just isn't right in the market I think we will see Enron 2.0 coming up here shortly.
Roman Polanski is tidying up the guestroom as we speak...
I think Goldman sort of has this tradition of when a CEO has been in charge long enough, the firm gives him the option to leave quietly/gracefully for the good of the firm. Lloyd seems to be having trouble with that, and I think this is the proverbial "last chance" before things start getting ugly. Just my thinking, I could be wrong.
Blankfein and Goldman execs to be indicted (Originally Posted: 04/14/2011)
http://www.bloomberg.com/news/2011-04-14/goldman-sachs-credit-default-s…
History rarely repeats itself, but nearly every technical analyst on Wall Street will tell you that sometimes it rhymes. I wanted to start my post with a story that started before I was born and ended before I could multiply.
===== In 1969, a young Ivy League graduate with an MBA joined a white-shoe waspy investment bank that was close to the top of its game. His name was Mike. Mike had done some studies on high yield risky debt as part of his degree at Wharton. His studies showed that high-yield debt outperformed a lot of different assets, and as a consequence of his background, his firm set him up as a bond trader in fallen angels.
Mike made a name for himself- and the firm as a bond trader during the '70s. He got a lot of other investors into the high yield bonds during a time when interest rates were high, markets were boring, and investors were looking for some sort of return. Eventually, corporate borrowers realized that if they went through Mike- and his firm- they could issue debt the market would have never been interested in ten years ago. Now that firms could borrow like crazy, it set up the merger mania and leveraged buyout period of the late '70s and '80s. All of a sudden, Mike was the richest trader on the planet working for a firm that was topping the league tables.
But that wasn't enough for Mike. He thought all of this success made him special. He thought he could trade on insider information and get away with it. And he did for a while. Then in 1986, one of Mike's friends- Ivan Boesky pleaded guilty to insider trading and ratted Mike out to the SEC, who started investigating him. Then the crash of '87 hit, putting a number of Mike's clients out of business- particularly those who'd levered up on the junk bonds Mike's firm helped them issue. Finally, the US prosecutor launched a RICO suit against Mike's firm and indicted Mike on criminal insider trading charges.
By 1991, Mike's old firm, Drexel Burnham- which had been at the top of the league tables just a few years earlier- was bankrupt, and Mike Milken was in jail.
You can read more about the story in "Den Of Thieves" and "Predator's Ball".
=====
So history doesn't repeat itself, but sometimes it rhymes. Today, we might be seeing a similar story to that of Drexel Burnham playing out over a decade or so. Five years ago, Goldman Sachs was a firm at the top of the league tables, the envy of every banker. Right around the same time, a few traders at the firm might have started to get greedy, even bragging about them engineering what would become the greatest mortgage meltdown in history.
Today, we're starting to see some action by the investigators, including referring the firm's CEO for perjury. This may all be just political- but it is interesting to note that Milken hired a number of lobbyists during the investigation to make it look like it was a political thing rather than a criminal thing. It didn't work.
Will this end with a RICO suit, corporate bankruptcy, and jail time? I'm not sure. Not all of the evidence is out there and I wouldn't wish jail time or a criminal prosecution on anyone, although the best long-term move for the financial industry is for people who commit crimes to be punished. What I can say is that if history rhymes, the possibility seems to be increasing.
Can't happen, don't you know goldman is part of the govenmet. Just like the FBI, they're a federally funded operation. No way the CEO is going down
whats does indicted mean?
This is so ridiculously stupid. While its easy to cast GS in a negative light to the general public, this "double dealing" is absolutely being misrepresented. Everyone with moderate inteligence can understand that every employee at GS isn't a generalist across divisions, products, industries and functions. They fucntion in silos and for a variety of reasons including developing proprietory/expertise, operational logistics and chinese walls.
Absent an e-mail from a GS prop trader that shows their analysis of exactly why they think shorting CDOs is a sure bet and the sales/trader/structurer responsible for making a market for this position saying "wow, thats incredibly compelling, I can't believe no one else sees this. Will find you a counterpart to this."
The people structuring these trades are responsible for making markets. Someone comes to them and says "I want to buy a widget for $1" they go out and find someone willing to sell a widget for $1. Is there a conflict of interest because they are buying the widget from a counterpart that believes widget valuations will decline while simultaneously selling that widget to another counterpart because they believe that widget valuations will increase? I don't think so at all. Thats what a broker/dealer and market maker does. Does the above logic change if one of the counterparts is another division inside of GS? Again, I dont believe it does unless and until there is compelling evidence that the person structuring the CDOs was misrepresenting key aspects of the CDO in order to help GS tak that position... in which case that would be improper even if both counterparts were third-parties.
Unless the people structuring, marketing and selling these CDOs at GS were instrumental in deriving the short-CDO's trade itself, I find this to be complete BS. By this logic why is Paulson & Co not accountable for taking short positions when they KNEW for a FACT that CDOs were going to implode on themselves?
This witch hunt has got to end!
Laboriosam blanditiis deserunt consequatur facilis rerum nihil eum totam. Quos ipsa ab totam impedit asperiores similique sit. Cupiditate quo et commodi tempora nulla.
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