Tag: Goldman Sachs

Drones on Wall Street

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Training the trainer

Drones have arrived on Wall Street, reports cnbc.com. Major investment banks are deploying the craft to offer important clients “a bird’s-eye view” of companies they’re interested in merging with or acquiring (M&A)…

Goldman Sachs, one of the world’s top M&A advisors, is one such company employing drones. Stephan Feldgoise, the firm’s global co-head of mergers and acquisitions, said, “We have been selling asset-based businesses all over the world using drones for site visits and fly-overs. It gives buyers the confidence they need because when you are purchasing a business, you want to see, touch and feel what you’re buying. ” He added, “Drones are likely here to stay. We believe it will change the M&A landscape forever.”

The personal on-site walk-through is over. COVID-19 put an end to that. Looks like a positive change. More than 95% of the several hundred deals Goldman closed since the start of the pandemic utilized drones for an on-site tour.

Wall Street trader whines over $8.25 million bonus — sues for more!

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Dweeb Salem

A former Goldman Sachs trader, still furious at getting only an $8.25 million bonus in 2010, has taken the giant investment bank to court to get paid millions more.

Deeb Salem says he helped Goldman earn more than $7 billion and that a little more money in his pocket would only be fair considering all his contributions. He wants about $5 million in additional pay…

In his petition filed last week in New York’s State Supreme Court, Salem said things at Goldman started to unravel when he got a written warning about his 2007 job self-evaluation, Bloomberg reports. In that self-evaluation, Salem reportedly discussed a short squeeze involving derivatives linked to subprime home loans in 2007.

His own words were later used by U.S. Senators investigating whether Goldman bet against the mortgage market in 2006 and 2007 in such a way that helped it reap massive rewards as the housing sector tanked…

Salem watched his annual bonus go from $15 million in 2009 to $8.25 million the next year and $3 million in 2011. He left the firm in 2012 but soon filed a complaint about his 2010 pay with the Financial Industry Regulatory Authority, Wall Street’s self-funded regulator. He tried to get more than $16 million from Goldman in arbitration, including nearly $7 million in deferred stock he felt he was owed. [He lost]

Now, Salem wants New York’s state court to overturn that regulatory decision. Goldman has argued that it has the final say on all bonus amounts and that Salem was aware of the policy.

The dude received more than $35 million in pay over six years. Goldman’s lawyer, Andrew Frackman, said…”He made a ton of money…He’s not entitled to more simply because he would like to have been paid more…”

Thanks, Mike

Fabulous Fab from Goldman Sachs guilty of $1 billion fraud

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Honesty? What a concept.

A New York jury has found former Goldman Sachs trader Fabrice Tourre liable for fraud in a complex mortgage deal that cost investors $1 billion.

Jurors concluded that the trader, who nicknamed himself “Fabulous Fab”, had misled investors in the run up to the global financial crisis in 2008…

Mr Tourre was found liable in six of the seven fraud claims brought by US financial regulators.

He was accused by the Securities and Exchange Commission of misleading investors about investments linked to subprime mortgages that he knew would fail.

Because the case is civil rather than criminal, he faces possible fines and a ban from the financial services industry…

In his closing arguments, SEC lawyer Matthew Martens described Mr Tourre’s testimony as “surreal, imaginary, unreal, dream-like”.

He was also described by the regulator as the “face of Wall Street greed“…

Responding to the verdict, Andrew Ceresney, co-director of the SEC’s enforcement division, said: “We will continue to vigorously seek to hold accountable, and bring to trial when necessary, those who commit fraud on Wall Street…”

According to its website, the commission has charged 157 firms and individuals so far, including 66 senior executives, and has secured $2.7 billion in fines and penalties.

Goldman Sachs settled its case with the SEC in 2010, paying $550 million without admitting or denying any wrongdoing.

Step by step, the longest march can be won. If our politicians think fines are sufficient, that’s just another reason to throw the bums out and vote in someone with backbone.

Why does Goldman Sachs own a coal mine in Colombia?

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Reuters/Brendan McDermid

In 1913, Congress determined that a cabal of Wall Street bankers had captured control over the US economy. Having bought up large shares of railroads, utilities, and manufacturers, these titans of finance had acquired the power to pick whether a business thrived or failed, and could effectively direct the nation’s commerce. “[I]t is fraught with peril to the welfare of the country,” wrote the Pujo Committee, the investigating body.

In the century since, banks have mostly been prohibited from direct involvement in non-banking activities—transporting and storing goods, for example, or running commercial businesses. But today, a handful of banks are back in the game of real stuff and services. Goldman Sachs, for example, owns a coal mine in Colombia and a giant metals warehouse in Detroit. Morgan Stanley owns and operates electric power plants outside Reno and delivers cargoes of liquefied natural gas to Argentina.

This fall, the Federal Reserve will decide whether to allow these two banks to continue owning and operating these businesses. Experts say that if Goldman Sachs and Morgan Stanley get their way, the result could vastly expand the reach and influence of the entire banking industry—even as lawmakers hustle for ways to rein in these same giants.

The banks stand to gain the most rights in markets for essential commodities, like oil, gas, metals and electricity. Over the last decade, the Fed has allowed a handful of commercial banks to directly enter these industries, largely through circuitous back road legal processes. Its decision in this instance could open a highway for everyone.

“This would concentrate even more power among a few,” said Saule Omarova, a professor at the University of North Carolina at Chapel Hill School of Law and author of “The Merchants of Wall Street,” a seminal paper on the legal and policy implications of banks’ physical operations. “What we have here is essentially the same story as J.P. Morgan controlling railroads and infrastructure in the early 20th century—it’s just a different level of sophistication…”

The only provision of Dodd-Frank, the financial reform bill Congress passed in 2010, that would stop banks from running commodity businesses is the Volcker Rule, which forbids banks from betting with their own money. Regulators are still finalizing the rule, but the latest version would not affect these activities. A legislative aide who worked on the rule said lawmakers would have addressed the issue had they known the extent of banks’ physical operations.

Omarova says the Fed can act in the public’s interest, if it chooses. The Fed “does not need to meet an especially high burden of proof to order the banks to get out of physical commodities,” she said. “The question is, will the Fed exercise that power? Who is setting the terms of the conversation at the Fed? The public has no idea.”

And Congress hasn’t a clue.

We are a nation willing to leave the “people in charge” to continue whatever it is they do. Polls determine that Congress has a lower reputation than a boil on your dog’s butt. We know the average American refuses to accept our president’s determination that security is more important than privacy.

Isn’t it about time to throw the bums out if they don’t change their ways?

Apple, Morgan Stanley, corporations unite to support gay marriage

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Gay-marriage advocates, aiming to show broad support as the U.S. Supreme Court takes up the issue for the first time, have enlisted Apple, Morgan Stanley and dozens of Republicans who once held top government positions…

The justices will hear arguments March 26 on California’s Proposition 8, the 2008 ballot initiative that halted gay marriage in the state after it was allowed for five months.

The corporate group, which also includes Facebook and Intel will argue in its brief that gay-marriage bans in 41 states harm workplace morale and undermine recruiting.

“No matter how welcoming the corporate culture, it cannot overcome the societal stigma institutionalized by Proposition 8 and similar laws,” the companies will argue.

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China becomes the world’s biggest trading nation

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China surpassed the U.S. to become the world’s biggest trading nation last year as measured by the sum of exports and imports, a milestone in the Asian nation’s challenge to the U.S. dominance in global commerce that emerged after the end of World War II in 1945.

U.S. exports and imports last year totaled $3.82 trillion, the U.S. Commerce Department said last week. China’s customs administration reported last month that the country’s total trade in 2012 amounted to $3.87 trillion. China had a $231.1 billion annual trade surplus while the U.S. had a trade deficit of $727.9 billion.

China’s emergence as the biggest global trading nation gives it increasing influence, threatening to disrupt regional trading blocs as it becomes the most important commercial partner for countries including Germany, which will export twice as much to China by the end of the decade as it does to neighboring France, said Goldman Sachs Group’s Jim O’Neill.

“For so many countries around the world, China is becoming rapidly the most important bilateral trade partner,” O’Neill, chairman of Goldman Sachs’s asset management division and the economist who bound Brazil to Russia, India and China to form the BRIC investing strategy, said in a telephone interview. “At this kind of pace by the end of the decade many European countries will be doing more individual trade with China than with bilateral partners in Europe.”

Still, the U.S. economy is more than double the size of China’s, according to the World Bank. In 2011, the U.S. gross domestic product reached $15 trillion while China’s totaled $7.3 trillion.

“It is remarkable that an economy that is only a fraction of the size of the U.S. economy has a larger trading volume,” Nicholas Lardy, a senior fellow at the Peterson Institute for International Economics in Washington, said in an e-mail. “The surpassing of the U.S. is not because of a substantially undervalued currency that has led to an export boom,” said Lardy, noting that Chinese imports have grown more rapidly than exports since 2007…

Of course, the typical American politician – whether he knows the facts or not – will still try to trade xenophobia for votes.

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Think Congress left corporate subsidies out of the Fiscal Cliff bill?

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Throughout the months of November and December, a steady stream of corporate CEOs flowed in and out of the White House to discuss the impending fiscal cliff. Many of them, such as Lloyd Blankfein of Goldman Sachs, would then publicly come out and talk about how modest increases of tax rates on the wealthy were reasonable in order to deal with the deficit problem. What wasn’t mentioned is what these leaders wanted, which is what’s known as “tax extenders”, or roughly $205 Billion of tax breaks for corporations. With such a banal name, and boring and difficult to read line items in the bill, few political operatives have bothered to pay attention to this part of the bill. But it is critical to understanding what is going on…

Most tax credits drop straight to the bottom line – it’s why companies like Enron considered its tax compliance section a “profit center”. A few hundred billion dollars of tax expenditures is a major carrot to offer. Surely, a modest hike in income taxes for people who make more than $400k in income and stupid enough not to take that money in capital gain would be worth trading off for the few hundred billion dollars in corporate pork. This is what the fiscal cliff is about – who gets the money. And by leaving out the corporate sector, nearly anyone who talks about this debate is leaving out a key negotiating partner…

Here are a couple of the goodies. There actually is a generalized tax credit or two worth keeping. Most of these plain-and-simple suck tax dollars that could do something otherwise useful.

1) Help out NASCAR – Sec 312 extends the “seven year recovery period for motorsports entertainment complex property”, which is to say it allows anyone who builds a racetrack and associated facilities to get tax breaks on it. This one was projected to cost $43 million over two years.

3) Disney’s Gotta Eat – Sec. 317 is “Extension of special expensing rules for certain film and television productions”. It’s a relatively straightforward subsidy to Hollywood studios, and according to the Joint Tax Committee, was projected to cost $150m for 2010 and 2011.

5) Subsidies for Goldman Sachs Headquarters – Sec. 328 extends “tax exempt financing for York Liberty Zone,” which was a program to provide post-9/11 recovery funds. Rather than going to small businesses affected, however, this was, according to Bloomberg, “little more than a subsidy for fancy Manhattan apartments and office towers for Goldman Sachs and Bank of America Corp.” Michael Bloomberg himself actually thought the program was excessive, so that’s saying something. According to David Cay Johnston’s The Fine Print, Goldman got $1.6 billion in tax free financing for its new massive headquarters through Liberty Bonds.

You get the idea. RTFA. Recognize for the umpteenth time the hacks in Congress can’t pass up a single opportunity to kiss butt for the folks picking up the tab for their political campaigns.

Canada’s Mark Carney chosen to head the Bank of England

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Bank of Canada Governor Mark Carney was unexpectedly named head of the Bank of England as the U.K. government looked abroad for a candidate untainted by financial turmoil to lead the beefed-up central bank.

Carney, a 47-year-old former Goldman Sachs managing director, will become the first foreigner to run the 318-year-old institution as it absorbs new powers to oversee banks. He’ll replace Mervyn King, 64, in July as policy makers pursue record-low interest rates and asset-buying to propel the economy from its first double-dip recession since the 1970s.

Carney’s London posting comes after a series of trading scandals dented the capital’s status as the world’s leading financial center, prompting a rejig of regulation that will test skills the Canadian gleaned as head of the world’s banking watchdog. His chief rival for the job, BOE Deputy Governor Paul Tucker, became entangled in the Libor rate-rigging scandal earlier this year.

“It’s incredibly bold of the government to appoint a foreigner,” said Steven Bell, chief economist at hedge fund GLC Ltd. in London and a former U.K. Treasury official. “He has experience of running the regulatory and monetary policy decisions. He’s highly regarded…”

Carney, who holds an economics degree from Harvard and a doctorate from Oxford University, swaps oversight of an economy which bounced back from the global recession without witnessing a single bank bailout for one which slipped back into recession in the second quarter and required multiple bank rescues…

“Most in the City of London had taken for granted that, despite the Libor scandal which may have damaged him more than many thought at the time, Deputy Governor Paul Tucker was probably the most likely appointment,” Rob Carnell, chief international economist at ING Groep NV in London, said in an e-mail.

Tucker’s chances may also have been undermined by his status as a BOE insider. Three reports commissioned by the central bank’s governing body and published this month criticized its hierarchical culture…The reports “highlight a culture that needs changing, a task that would probably have been more difficult for a candidate from within,” said Rob Wood, an economist at Berenberg in London who worked at the BOE until earlier this year…

The current bank regulator, the Financial Services Authority, will be dissolved and a new Prudential Regulatory Authority will oversee all deposit-taking institutions, insurers, investment banks and clearing houses. It will operate within the Bank of England, while Carney will lead the Financial Policy Committee, charged with addressing risks to the broader financial system.

At the Financial Stability Board, Carney has led the effort to rewire the rules of global finance. He pushed for tougher regulations for global lenders and clashed with banking executives such as JPMorgan Chase CEO Jamie Dimon over requirements to hold more capital. He will keep his job as chairman of the FSB.

I only wish there was video available of the clash between Carney and Dimon. Both are knowledgeable, eloquent – and monumentally self-assured.

Just as surely as Wall Street and the New York Stock Exchange consider themselves the center of world business – so does the City of London. I won’t venture an opinion on that; but, I watched a dynamic discussion on Carney between Tom Keene and Stephen Roach on early morning Bloomberg TV, today. Nothing but fun – and he’s definitely been chosen to jostle the old boys inside the “square mile”.

There ain’t always unity in Class Warfare

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This morning, Lloyd Blankfein, the head of one of the most prestigious investment firms in America released a video on YouTube for the Human Rights Campaign. Supporting equal rights for same-sex marriage.

Mr Quiet, Mr Unassuming, Blackfein has always participated in positive charities in NYC, around the country and around the world. But, he’s not an out-front kind of spokesman. Until today.

Unlike many of his peers he’s not taken any bonuses in recent times – in fact, he cut his pay. And he’s the head of a Wall Street investment firm that non-students of American history may not realize was founded as a response to bigotry. Back when Wall Street firms wouldn’t hire Jews.

So, kudos to you, Lloyd. I don’t own any shares of Goldman Sachs – or any investment bank for that matter. But, as an ordinary American who thinks our Constitution and Bill of Rights mandate equal opportunity that is still denied by today’s generation of conservatives, Republicans, Tea Party types, right-wing priests and pundits – welcome aboard!

Sisters of St. Francis – occupying Wall Street since 1980

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Sister Nora Nash

Long before Occupy Wall Street, the Sisters of St. Francis were quietly staging an occupation of their own. In recent years, this Roman Catholic order of 540 or so nuns has become one of the most surprising groups of corporate activists around.

The nuns have gone toe-to-toe with Kroger, the grocery store chain, over farm worker rights; with McDonald’s, over childhood obesity; and with Wells Fargo, over lending practices. They have tried, with mixed success, to exert some moral suasion over Fortune 500 executives, a group not always known for its piety…

The Sisters of St. Francis are an unusual example of the shareholder activism that has ripped through corporate America since the 1980s. Public pension funds led the way, flexing their financial muscles on issues from investment returns to workplace violence. Then, mutual fund managers charged in, followed by rabble-rousing hedge fund managers who tried to shame companies into replacing their C.E.O.’s, shaking up their boards — anything to bolster the value of their investments.

The nuns have something else in mind: using the investments in their retirement fund to become Wall Street’s moral minority…

In 1980, Sister Nora Nash and her community formed a corporate responsibility committee to combat what they saw as troubling developments at the businesses in which they invested their retirement fund. A year later, in coordination with groups like the Philadelphia Area Coalition for Responsible Investment, they mounted their offensive. They boycotted Big Oil, took aim at Nestlé over labor policies, and urged Big Tobacco to change its ways.

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