This is how beggar-thy-neighbor monetary policies work, and perhaps why they ultimately fail.» Read More
Goldman is often accused of being “ruthlessly self-serving” in its dealing with clients. Goldman, of course, maintains that it is still dedicated to serving its clients.
Unfortunately for Goldman, the report from the Senate investigations committee includes crystal clear evidence of its traders being, well, ruthlessly self-serving.
Goldman Sachs CEO Lloyd Blankfein and other top executives at the firm may not have understood the positions they were taking in the mortgage market, according to a report released today by the Senate Investigations subcommittee.
The report —which runs to 635 pages—details how Goldman built up a massive short position in mortgage-related assets following the collapse of two subprime Bear Stearns hedge funds. This was referred to as “the big short” within Goldman.
When Goldman Sachs was making breathtaking gains as the subprime mortgage market collapsed in 2007, one of the most mysterious aspects of the trade was how Goldman could do this without appearing to dramatically raise the risks it was taking.
The Senate investigation committee’s report issued Thursday shows how this was accomplished: two weeks before the quarter ended, Goldman’s top executives would order the mortgage trading desk to reduce its risk. Because the mortgage desk was responsible for the majority of the firm’s risk—54 percent in August of 2007—this reduced firmwide risk. Goldman would then report lower risk in its quarterly reports.
We can't say we're surprised that a Senate report released yesterday, that details what caused the financial crisis, focuses on Goldman Sachs. A lot.
The findings of a two-year analysis "trains much of its ire on Goldman Sachs, which Sen. Levin said deceived some clients by betting against home loans in 2006 and 2007, while simultaneously selling mortgage securities," the WSJ reported.
But Levin thinks Goldman deceived more than its investors.
'Bankers Running Rings Around Regulators' [CNBC.com's Patrick Allen]
Senator Levin blasts Goldman Sachs saying the bank 'Misled Congress After Duping Clients' [Bloomberg]
'Senate Report Lays Bare Mortgage Mess' [WSJ] "Some call the concept of owning a home the American dream. Wall Street bankers called is something different: 'Pigs.' 'Crap.' A 'white elephant, flying pig and unicorn'."
Jobless claims rise unexpectedly [CNBC.com via Reuters]
Massive recall of more than a million Ford F-150 trucks.
These guys are always innovative.
Less than a week before the one year anniversary of the BP Deepwater Horizon disaster, the oil giant will be holding its annual meeting. The MMA Praxis Mutual Funds, a "socially responsible" investor group that owns shares of BP, is advocating that shareholders abstain or vote against the company's annual report and directors who are members of BP's Safety, Ethics and Environmental Assurance Committee.
I caught up with Mark Regier director of stewardship investing at MMA Praxis Mutual funds, ahead of this meeting.
The "doom loop" is shaking up stock markets as worries of negative interest rates in the US may come.
The rivalry between Bill Gross and his former company Pimco looks set to hinge on the U.S. economy this year. FT reports.
Tender issued for euro-denominated unsecured bonds worth 3 billion euros and dollar-denominated bonds worth $2 billion.