Goldman Sachs Gets its Tentacles into The Bank of England

 

The Bank of England has hired Huw Pill, a Goldman Sachs veteran and a senior lecturer at Harvard Business School, as its new chief economist.

The appointment will make Pill, 53, one of the most influential economists in the country and puts him on the rate-setting monetary policy committee.

The hiring of another Goldman alumnus drew immediate criticism. Mark Carney, the former governor, was a Goldman banker and Ben Broadbent, deputy governor for monetary policy was a senior economist there.

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Goldman's 1.5% Savings Account

Goldman Sachs was fined $5bn for misconduct during the financial crisis and needed a $10bn bailout from the US Treasury. Today it's launching a bank account for UK customers. So would you trust it with your savings? Its boss told me on @BBCBreakfast how - and why - it's changed. pic.twitter.com/WhfcHLQNHX

— Ben Thompson (@BBCBenThompson) September 27, 2018

Has the Vampire Squid changed its spots?

Things Are Going To Get Worse

"We think that trade tensions will probably worsen before they get better” - Goldman

— zerohedge (@zerohedge) July 11, 2018

Goldman Sachs Organises Muppet Hunt

Following on the from the Muppetgate scandal, in which Greg Smith publicly resigned and humiliated Goldman Sachs (Goldman employees allegedly refer to their clients as "muppets"), Goldman Sachs is taking no chances about further damage to its reputation. It has organised a Muppet hunt.

Goldman Sachs has started scanning emails for the term "muppet"  It is not clear as to whether the firm is also searching for; Kermit, Miss Piggy, Fozzie Bear or Gonzo the Great.

Neither is it clear what Goldman's will do to any hapless employee who has used the offending term in an email.

As to whether this scan is a breach of employee's rights of privacy depends very much on their terms and conditions of employment, and what rights they signed away when joining Goldman Sachs.

Why I Am Leaving Goldman Sachs

There is a remarkable letter in the New York Times from Greg Smith (executive director and head of the Goldman Sachs United States equity derivatives business in Europe, the Middle East and Africa) who, after 12 years, is leaving Goldman Sachs and has penned his reasons why.

Seemingly the motive of making money at the client's expense (apparently this was not the culture of the firm 12 years ago, or at least Smith claims not to have seen it then) has turned him against Goldman Sachs.

Additionally, he was irked by the fact that Goldman employees allegedly would refer to their clients as "muppets" (I understand that Kermit, Miss Piggy et al are considering legal action against Goldman's for this alleged slur).

As regards Smith's career in Goldman's, his CV (or Resume as it is called in the USA) is proving to be a little hard to track down on the web (here is his Facebook page) aside from this entry on Find The Best:

Professional Bio
Advisor Name	Gregory Smith
Individual CRD #	4438607
Registered Titles	Broker-Dealer Agent
Firm	Goldman, Sachs & Co. Compare Goldman, Sachs & Co. Financial Advisors
Current Office Employment Dates	1/1/11 - Present
Firm CRD #	361
State Registrations	Alaska California Colorado Florida Georgia Kentucky Maine Maryland Michigan Missouri Nevada New Jersey Tennessee Texas Utah Vermont West Virginia
Independent Contractor	No
Work History
Firm City State Start Date End Date Goldman, Sachs & Co. New York NY 12/1/02 1/1/11 Goldman, Sachs & Co. New York NY 1/1/11 Goldman, Sachs & Co. New York NY 1/1/11 Present
*Please note that the IAR is required to provide this information only while registered with an investment advisor firm and the information is not updated through Form U4 after the IAR ceases to be registered. Therefore, an employment end date of
Financial Exams
Exam Date Exam Code Grade 12/30/02 Series 3 Passed 10/26/06 Series 55 Passed 10/17/01 Series 63 Passed 10/9/01 Series 7 Passed

It is possible that he had something to do with Goldman's debacle in Libya (given that he had responsibility for the Middle East):

"In early 2008, according to interviews and an internal document review conducted by The Wall Street Journal, Libya's sovereign wealth fund invested $1.3 billion in stock and currency options with Goldman, only to watch as the investments shrunk to a measly $25.1 million--that's two percent of the initial value, for those keeping score--as the credit crisis hit. 

A Libyan official was so furious with the bank during one meeting in Tripoli that Goldman officials hired a security guard to protect them before they left Libya, consulted Goldman chief Lloyd Blankfein (above, on right) about how to mend the relationship, and offered Libya the opportunity to become one of Goldman's biggest shareholders by investing $3.7 billion in preferred shares or corporate debt. 

The negotiations eventually collapsed, the Journal adds, but the episode is emblematic of a period of several years when Goldman and other Western banks rushed to do business with Libya after the U.S. decided to lift its sanctions against the country in 2004. That period, of course, is now history."

Maybe not, for the Wall Street Journal notes the following:

"Mr. Smith described himself as an executive director and head of Goldman’s U.S. equity derivatives business in Europe, the Middle East and Africa.

A person familiar with the matter said Mr. Smith’s role is actually vice president, a relatively junior position held by thousands of Goldman employees around the world. And Mr. Smith is the only employee in the derivatives business that he heads, this person said."

Whatever Smith's actual role in Goldman's, and as to whether he finds himself sued by Goldman Sachs for this extraordinary public outburst remains to be seen. In the meantime Goldman are now including 3 year non-disparagement clauses in all termination agreements (if they can get this by the lawyers, these will be retrospective).

The Greek Tragedy Laid Bare!

As Greece struggles to find the extra Euro325M to fill the black hole in its austerity "plan", here comes a timely reminder of where they could have found the money from (based on a discussion that Nina Maria Potts had with a Greek protester):

Nina-Maria Potts @NinaMariaPotts

"Greece ridiculed for not finding 325 mill to cut-the price our gvt paid to Goldman Sachs to hide size of public debt.

325 mill paid to Goldman Sachs to hide our public debt was signed by Papademos himself.Now my mother has to cut 15% of a 850 euro pension."

I am sure that if Goldman Sachs were asked nicely, they would return the fee!

Of Mice and Men

Despite the rancorous meetings over the weekend between various "leaders" of the Eurozone and other leaders from non Eurozone countries, the markets are optimistic that a deal will be reached by Wednesday that will resolve the Eurocrisis.

Sadly this optimism is somewhat misplaced.

Aside from rumours that Wednesday's "solve the Eurocrisis" meeting (the one that was postponed from Sunday) may in fact be postponed, today's economic news for the Eurozone is not good.

Goldman Sachs have published manufacturing and services PMI numbers that show a decline to 47.2 in October down from 49.1 in September. This is the sixth consecutive monthly decline, and it clearly shows that the Eurozone is in a recession.

Does this matter?

Yes, it does matter, aside from the obvious negative effects on people's standards of living it will also increase the pressure on ratings agencies to downgrade France's rating. In the event that this happens, the calculations behind the "plans" for the Eurozone bailout will go out of the window.

Now repeat after me and learn this for prep:

- There is no plan
- There was no plan
- There will never be a plan

Is Goldman Sachs Value For Money?

Goldman Sachs (described by some as a giant blood sucking vampire squid) is facing a call from four orders of catholic nuns to review whether the $69M pay awarded to chief executive Lloyd Blankfein, and other senior executives, is excessive.

The Sisters of Saint Joseph of Boston, the Sisters of Notre Dame de Namur, the Sisters of St. Francis of Philadelphia and the Benedictine Sisters of Mt. Angel own shares in the company, and have tabled the proposal for next month's AGM.

Mr Blankfein should have no trouble in allaying the fears of the nuns, as he once said that Goldman's was doing "God's work".

Goldman Sachs Bans Swearing

Goldman Sachs, known by some as the "giant blood sucking squid", has issued a rather bizarre directive to employees banning them from swearing in internal emails.

Employees emails will be censored, and unacceptable words removed. Employees are also banned from using swear words with asterisks and shorthand for expletives.

Is this due to a sudden twinge of morality?

Errrmm...no.

Goldman Sachs have been highly embarrassed by the release of emails, during investigations into the bank's conduct, that contained a fair number of swear words.

Given human nature, and particularly the aggressive nature of those who work for Goldman Sachs, I doubt that this ruling will have much effect. Their staff will find ways around it.

I suspect that the next release of emails from Goldmans (if there is one) will doubtless emulate the Nixon tape transcripts "expletive deleted", which is just as bad.

I would suggest that they devote their energies, and morality, to more pressing matters.

Windfall For RBS

RBS, the "people's bank", will collect a nice little windfall as result of the decision by Goldman Sachs to take a $550M hit to settle civil fraud charges over how it marketed the sub prime mortgage product.

RBS is due to pick up $100M from this, because marketing materials for the Abacus 2007-ACI transaction allegedly contained incomplete information. RBS lost $841M from the deal with Goldman.

However, rumours abound that RBS may sue Goldman for the remaining loss.

One Month Breathing Space

Greece has been given a one month breathing space by the EU, before a decision is made as to whether to order Greece to introduce more austerity measures.

Greek Prime Minister, George Papandreou, claims that all Greece needs is time and it does not want European taxpayers' money.

"What we want is political support to end profiteering and the defamation of our country."

Fair enough, maybe.

However, given the fact that the previous Greek government committed fraud and was involved in some seriously questionable deals with Goldman Sachs, what does he expect?

The least worst option is for Greece to leave the Euro, and approach the IMF for funding.

The Plans of Bankers and Men

The world's finance ministers from the G7 are meeting in Downing Street today, to discuss how best to avoid a repeat of the 2008 financial crisis.

The meeting has been given added impetus by President Obama's proposals last week to rein in the power and size of the banks.

Lord Myners, the UK's City Minister, wants banks to cover any future bailout costs and favours an insurance levy. A global bank transaction tax is also being considered.

Doubtless every effort will be made to prepare plans against possible future contingencies. However, markets will always rise/fall and economic crises will return no matter what rules and safeguards are in place.

Goldman Sachs, sensing that the political tide is currently not in their favour, have announced that they will cap the pay of their top 100 executives in London to £1M.

That of course leaves their non "top 100" executives free to be paid more than £1M.

Let The Good Times Roll!

It is heartening to know that the green shoots of recovery are sprouting in the world of investment banking.

A mere 12 months after the near collapse of the global financial system (the UK came close to people not being able to draw cash from their own bank accounts), investment bankers are about to enjoy a record bonus season.

Stock markets in London and New York are enjoying one of the strongest bull runs in decades, and investment banks are preparing to announce huge profits.

The Times reports, for example, that the average London worker at Goldman Sachs will receive approximately £467K in salary and bonuses (a 13% rise compared with 2007 and double the average in 2008).

So that's good news then!

Broke

The credit crunch is going to severely dent the British economy over the coming year or so.

This news should come as no surprise to those who have followed the ongoing meltdown of the banking system, and the knock on effects on consumer expenditure. However, it would seem to be "news" to the government and Alistair Darling.

The National Institute of Economic and Social Research predicts that there will be a £16BN shortfall of tax revenues over the next two years.

Jim O'Neill, chief economist at Goldman Sachs, who forecast the collapse of the US property market, said that Britain was likely to be the worst hit of the world's economies.

Mr O'Neill is quoted in The Times and said that Britain, with its heavy reliance on financial services, was "in the eye of the storm of a deleveraging world economy".

He added:

"The UK mortgage market is effectively frozen . . . House prices are going to go through negative changes . . . It's going to be a challenge for UK policymakers."

It certainly is going to be a "challenge", the question is are our policymakers and government up to the job?

D Day for Northern Wreck

Today, 16:00 to be precise, marks the deadline imposed by the government for bids to be placed for the beleaguered Northern Rock.

It seems that, despite being very pally with the Prime Minister, Richard Branson's Virgin is losing ground in the race to carve up the corpse of the once proud bank.

Virgin's known rivals are Paul Thompson, the former chief executive of insurer Resolution, who is leading a proposal to keep much of Northern Rock's management in place and ex-Abbey boss Luqman Arnold.

Although the deadline for bids is 16:00 today, the Tripartite Authorities, advised by Goldman Sachs, may take until the end of the month to pick a bidder.

The Government has told shareholders that they will not be allowed to determine the decision, but it is likely Goldman and the Treasury will take their views into account.

Failure to complete on a satisfactory deal will mean the nationalisation of Northern Rock.

Bonus Time

In the run up to Christmas, many people's credit cards are maxed out as they scrape their resources together to fund the feast of indulgence and revelry, spare a thought for the poor souls in the Square Mile.

It is now bonus season, where the select few can reap mind boggling sums on top of their annual salaries.

The Goldman Sachs bonus is reported to be an average of over £300K for every employee. This is nothing compared to some, figures in excess of £1M are paid to the real high flyers in the City.

The annual bonus round this year is expected to yield a bumper harvest. This in turn is expected to further stoke the housing bubble of London's over-stretched property market.

The question is, are these bonuses sustainable or justified?