Thursday, October 27, 2011

After doing God's work they...applied for gun permits

Why would that be?

See Bloomberg article from 2009. It's sort of interesting that the release of requested information has not been reported on...

I wonder if this is Goldman's version of a new "quiet period"?

Arming Goldman Sachs With Pistols: Alice Schroeder
By Alice Schroeder - Dec 3, 2009 Bloomberg Opinion
(Corrects second paragraph of story published Dec. 1 to say the New York Police Department believes some bankers may have received handgun permits.)

“I just wrote my first reference for a gun permit,” said a friend, who told me of swearing to the good character of a Goldman Sachs Group Inc. banker who applied to the local police for a permit to buy a pistol. The banker had told this friend of mine that senior Goldman people have loaded up on firearms and are now equipped to defend themselves if there is a populist uprising against the bank.

I called Goldman Sachs spokesman Lucas van Praag to ask whether it’s true that Goldman partners feel they need handguns to protect themselves from the angry proletariat. He didn’t call me back. The New York Police Department has told me that “as a preliminary matter, it appears that some of the records you requested may be in the possession of this department” after I asked for information on approved handgun permits for bankers. The NYPD also said it will be a while before it can name names.

While we wait, Goldman has wrapped itself in the flag of Warren Buffett, with whom it will jointly donate $500 million, part of an effort to burnish its image -- and gain new Goldman clients. Goldman Sachs Chief Executive Officer Lloyd Blankfein also reversed himself after having previously called Goldman’s greed “God’s work” and apologized earlier this month for having participated in things that were “clearly wrong.”

Has it really come to this? Imagine what emotions must be billowing through the halls of Goldman Sachs to provoke the firm into an apology. Talk that Goldman bankers might have armed themselves in self-defense would sound ludicrous, were it not so apt a metaphor for the way that the most successful people on Wall Street have become a target for public rage.

Pistol Ready
Common sense tells you a handgun is probably not even all that useful. Suppose an intruder sneaks past the doorman or jumps the security fence at night. By the time you pull the pistol out of your wife’s jewelry safe, find the ammunition, and load your weapon, Fifi the Pomeranian has already been taken hostage and the gun won’t do you any good. As for carrying a loaded pistol when you venture outside, dream on. Concealed gun permits are almost impossible for ordinary citizens to obtain in New York or nearby states.

In other words, a little humility and contrition are probably the better route.

Until a couple of weeks ago, that was obvious to everyone but Goldman, a firm famous for both prescience and arrogance. In a display of both, Blankfein began to raise his personal- security threat level early in the financial crisis. He keeps a summer home near the Hamptons, where unrestricted public access would put him at risk if the angry mobs rose up and marched to the East End of Long Island.

To the Barricades
He tried to buy a house elsewhere without attracting attention as the financial crisis unfolded in 2007, a move that was foiled by the New York Post. Then, Blankfein got permission from the local authorities to install a security gate at his house two months before Bear Stearns Cos. collapsed.

This is the kind of foresight that Goldman Sachs is justly famous for. Blankfein somehow anticipated the persecution complex his fellow bankers would soon suffer. Surely, though, this man who can afford to surround himself with a private army of security guards isn’t sleeping with the key to a gun safe under his pillow. The thought is just too bizarre to be true.

So maybe other senior people at Goldman Sachs have gone out and bought guns, and they know something. But what?

Henry Paulson, U.S. Treasury secretary during the bailout and a former Goldman Sachs CEO, let it slip during testimony to Congress last summer when he explained why it was so critical to bail out Goldman Sachs, and -- oh yes -- the other banks. People “were unhappy with the big discrepancies in wealth, but they at least believed in the system and in some form of market-driven capitalism. But if we had a complete meltdown, it could lead to people questioning the basis of the system.”

Torn Curtain
There you have it. The bailout was meant to keep the curtain drawn on the way the rich make money, not from the free market, but from the lack of one. Goldman Sachs blew its cover when the firm’s revenue from trading reached a record $27 billion in the first nine months of this year, and a public that was writhing in financial agony caught on that the profits earned on taxpayer capital were going to pay employee bonuses.

This slip-up let the other bailed-out banks happily hand off public blame to Goldman, which is unpopular among its peers because it always seems to win at everyone’s expense.

Plenty of Wall Streeters worry about the big discrepancies in wealth, and think the rise of a financial industry-led plutocracy is unjust. That doesn’t mean any of them plan to move into a double-wide mobile home as a show of solidarity with the little people, though.

Cool Hand Lloyd
No, talk of Goldman and guns plays right into the way Wall- Streeters like to think of themselves. Even those who were bailed out believe they are tough, macho Clint Eastwoods of the financial frontier, protecting the fistful of dollars in one hand with the Glock in the other. The last thing they want is to be so reasonably paid that the peasants have no interest in lynching them.

And if the proles really do appear brandishing pitchforks at the doors of Park Avenue and the gates of Round Hill Road, you can be sure that the Goldman guys and their families will be holed up in their safe rooms with their firearms. If nothing else, that pistol permit might go part way toward explaining why they won’t be standing outside with the rest of the crowd, broke and humiliated, saying, “Damn, I was on the wrong side of a trade with Goldman again.”

(Alice Schroeder, author of “The Snowball: Warren Buffett and the Business of Life” and a former managing director at Morgan Stanley, is a Bloomberg News columnist. The opinions expressed are her own.)

Click on “Send Comment” in the sidebar display to send a letter to the editor.

To contact the writer of this column: Alice Schroeder at

To contact the editor responsible for this column: James Greiff at

Sunday, October 23, 2011

Only the good...

assets (or what's left) in around the Euro zone are likely to experience that correlation event that makes models (and their technicians) sputter and gasp as they are victimized by their very liquidity, as bids head south in a hurry, deja vu all over again. Liquidity seekers find out real quick what they can sell in a hurry; it's not complicated, sort of like when your significant other doesn't answer your ring - when you really need them; dealers' that same interminable, telling...honest ring.

What's bad (assets) in the Euro zone will always be as it always was; any liquidity has long ago dried up; no matter the extra moisturizer from sponsors' sponsors.

Sort of like, make that a Gresham's law comeuppance only applied to markets of securities; not suspecting, but deserved indeed inevitable.

How many times do we have to suffer through this video tape.

Friday, October 21, 2011

Help me fill in the blanks - an exercise in Safety and Soundness a little too late...

The financial crisis underscores the importance of good risk management practices and systems. Some firms had a better understanding of the risks that they were exposed to and liquidated positions (of ________) and bought protection (on ________)as the housing boom (caused by ______)turned bust. But others took too much comfort in credit ratings (on _______) or felt too comfortable operating with very high risk concentrations (of ______). The desire to protect revenue streams (from ______)also caused some firms to stick much too long with businesses (composed of _________) that were much more exposed to risk than anticipated...

Today Mr Dudley told GARP (Global Association of RISK Professionals) the above.

I'm sure many of the attendees can attest to the Safety and Soundness drill that SHOULD have been plain to see; unless of course those bonus checks based on the risks enumerated above were too much to resist back in the day.

Tuesday, October 4, 2011

It's time...

to say Foxtrot Oscar to the TBTF Banks and especially the proprietary traders and their supervisors, and the media plants that will never get it, never report it; likely until their sponsors change.

Ratification EVERY time:
They ratified their on and off balance sheet MBS investments / exposures EVERY time they cashed a bonus check, EVERY single time they cashed a salary check, as they were supposed to be doing their job; minding the firm's capital. As far as I know, no trader EVER raised his or her hand and said "wait a minute my bonus is too much" did they? That means they ratified it.

Leading up to the so-called "2008 financial crisis" billions in bonuses were paid year after year to Wall St traders however, when they were bailed out, like rats (that's really too good for them as rats are not predators) they shrank away from the spotlight; as scripted by their "messaging" departments.

It's time to get back to the cause of the current crisis - caused by TBTF bank's prop trading departments; clawback and more...deserved.

Sunday, October 2, 2011

If and that's BIG...

1. If the Chairman of the Federal Reserve, Ben Bernanke didn’t know,
2. If other dealers, counter parties didn’t know,
3. If investors sophisticated and not sophisticated didn’t know,
4. Borrowers are presumed to have known therefore their notes are valid contracts.

Yes that’s the insult to logic many mortgage borrowers, their lawyers, foreclosure attorneys and the courts believe or better said, are led to believe. That because a mortgage borrower; whether high school or college grad, English, Spanish or Mandarin speaking, signed their name to a loan to buy a house that they knew the secret that Wall St was keeping from them and many others including #1, #2 and #3 above.

The names were changed to protect the innocent - NOT
Wall St has been given a new name (remember the old TV show Dragnet “we changed the names to protect the innocent”?) is now SIFI (Systemically important financial institutions), formerly known as, like Prince, the “artists” formerly known as Too Big to Fail (depository) institutions including investment banks (formerly known as Consolidated Supervised Entities, circa the discontinued 2004 SEC CSE program) and Bank holding companies.

Why did and do many Americans still believe this?
Remember “Now a note from our sponsors” that quintessential introduction has vanished (been removed) from our airwaves and digital ink, it seems now like since forever. Belief, whether through manipulation of facts and or guilt, mortgage borrowers are being told and led again by the same financial media that waved the poms poms as they (the sponsors) paraded by with glorious, massive, free market, capitalism bonus checks in tow before 2008.

Wake up Americans…because it’s not your fault at all – it’s a 5 step program… (*unless you falsified your loan docs)
When mortgage borrowers wake up and realize the mistakes they made were:
1) not bad market timing or 2) taking on too large a debt burden or 3) thinking that their job was secure or 4) thinking that house prices had no where to go but further and further out of reach, but 5) that they were hoodwinked by TBTF banks’ trillions of hidden investments (which were the cause of the very large proprietary traders’ bonus checks) then that day will be big.

There’s a fine but bright line between the free market, capitalism champions and fraud.