Saturday, April 25, 2009

Goldman's Hypocrisy Never Ends

"Goldman Sachs Group Inc. [GSG] Chairman and Chief Executive Lloyd Blankfein [LB] called for broad changes to how Wall Street pays employees and is regulated, saying 'the loss of public confidence from failing to live up to the expectations that we created will take years to rebuild.' ... Blankfein also recommended that stock awards be held for at least three years before they could be collected, a move that would rein in excessive risk-taking. ... 'We have a higher responsibility ... to act like an owner responsible for the integrity of the system.' ... Many of the recommendations made by Mr. Blankfein are being adopted or at least considered by some Wall Street firms as they react to public ire over their culpability for the financial crisis and bonus payments that to many Americans seem out of touch with reality. ... Blankfein didn't concede that Goldman has done anything wrong in how it pays employees. Indeed, some compensation experts noted that much of what Mr. Blankfein advocated is already in practice at Goldman. ... When deciding on pay for traders, bankers and other employees, Wall Street firms should take into account not only the contribution the employee made to profit or loss, but also the risks taken and the overall contribution to the better functioning of markets", my emphasis, Aaron Luchetti at the WSJ, 8 April 2009.

"A former chairman of Tajikistan's Central bank diverted more than $850 million to a company run by himself and his family, according to an independent audit posted on the bank's Web site on Monday", WSJ, 14 April 2009.

GSG and LB make me sick. GSG's shareholders should run LB out and tar and feather him. He admits he did not do his job properly. Stock awards be held for at least three years? Hmm. LB doesn't read IA, does he? See my 13 January 2009 post: http://skepticaltexascpa.blogspot.com/2009/01/incentives-count-for-bankers-too-3.html. Compensation experts? Where were these "experts" ten years ago? Act "like an owner"? What were you doing all along LB?

How much did former GSGer Hank Paulson "divert" to the members of his adopted family? We live in Tajikistan.

13 comments:

Anonymous said...

Morgan Stanley may transform its biggest proprietary trading desk into a hedge fund as a way to sidestep new government restrictions on pay and hiring.
http://www.finalternatives.com/node/7719

All of these pricks are dirtier then dirt.

Independent Accountant said...

Anonymous:
I was aware of this and think no bank should have a trading desk. I doubt the desk earned MS the $6.5 billion pre-tax reported in the article. With a proper cost of capital charge, I suspect it lost money. I have a post on GSG's cost of capital allocations. I will find it and reference it. Thanks for the lead.
We'll see how well the traders can do without access to MS's improperly allocated cost of capital.

Independent Accountant said...

Anonymous:
My 21 February 2009 post on GSG.

Anonymous said...

So Lehman Brothers fails and presto magic Blankfein and brethren show up Monday morning as a "commercial" bank courtesy of the Federal Reserve...

Sure... nothing has changed... they closed down their global macro fund... window dressing...

Didn't they make almost all their 1Q09 earnings from "principal" trading?

The Fed/Treas loves these guys cause they supposedly mediate monetary liquidity... ha ha ha... instead they are financial mercenaries... AIG... muni swaps... blah blah... as long as it's not overtly stinky like small cap "pump and dump" GS is doing it full bore... they "pumped and dumped" some trash MBS into insurance portfolios...(orange lion?)

Blankfein with his $68 million NYC coop... compensated to take risk? No, he is compensated to run policy in Washington and other global capitals...Tajikistan? Yup sounds about right...

Anonymous said...

and the worthless (literally) ideologically driven arguments continue. ugh. nobody ever made any money off this sort of garbage...go back to academia, you hump.

Anonymous said...

I've been pretty close to that group for a long long time, and I suspect that the $6.5B is correct. They are very capital efficient - it's a boatload of trading. Certainly in the 90s the bulk of the PnL came from essentially day-trading systems (high frequency stat arb), with a move towards longer holding periods as profitability grew. These guys are close to the best in the world at scalping fully systematically in just about every liquid market.

They are paid very very well. They are not the guys who put on billions of dollars of toxic garbage.

Independent Accountant said...

Anonymous:
Whatever these guys "profits" are, they are a function of cost of capital charges. If they "made" $6.5 billion, they would not be with GSG. They wouldn't need GSG. They would keep it all for themselves. No Wall Street guy leaves say 90% of $6.5 billion on the table.

Anonymous said...

Hi Accountant! Nice work!

Have you thought about totaling up all the amounts that went to ALL of Goldman AND affiliates as seen in the resently released counterparty list? I bet this total would be more scandalous than what is reported...if you do this, i hope you sell your report to a paper that will publish it...and then i wonder if the justice department will investigate?

dianne said...

For get about Tea Parties.

It's time for a Rub-On-the-Bank Party, this July 4th!

www.goldmansachsExposed.blogspot.com

Anonymous said...

see: "What's Good for GS Is Good for the Country"
http://www.goldmansachs666.com/2009/04/goldman-sachs-story-some-fiction-some.html

Anonymous said...

Crazy!

Jr Accountant said...

Congrats on making it to GS666, Pop.

You know I'm going to be working with Mike Morgan right?

http://www.goldmansachs666.com/2009/04/goldman-sachs-other-story-links-april.html

Even if we can't take them down, at least when all's said and done we can say we tried...

Jr

Anonymous said...

Boo Hoo! You are nothing but a whining tin-foil hat wearing loser. Give it up, your blog is a perfect example of what happens to bitter old men who decide to blame the world for their own sorry place in life.