×

Is The White House Gunning For Goldman?

In an exclusive interview Karen Finerman asked Obama advisor Larry Summers if the Volcker Rule takes aim at Goldman . His reply may surprise you!

As you likely know the Volcker Rule is a new set of regulations proposed by the Obama administration in conjunction with former Fed chief Paul Volcker designed to prevent a bank from making very risky bets.

Specifically the Volcker Rule restricts banks from making speculative investments using their own capital -- an activity known as proprietary trading -- and from owning a hedge fund or private equity fund.

And in an exclusive interview with Larry Summers, Finerman commented that the new rule felt as if “it was written to take aim at Goldman Sachs” which makes most of their money off proprietary trading.

Although Summers refused to comment specifically he did make one things very clear -- the administration's definition of proprietary trading.

He said, “if a company sets up a separate unit that is going to make guesses and judgments about which way foreign exchange markets are going to go – and speculates in foreign exchange markets,” that’s proprietary trading.

That sounds an awful lot like Goldman.

But perhaps more important, Summers wanted to make clear that “the Volcker Rule only speaks to institutions that are banks. It does not speak to other types of financial institutions – pure investment banks for example.”

That sure gives more credence to the market rumors that Goldman’s business model is too speculative for it to remain a bank.

“If they want to go back to being (an investment bank) they should be allowed to go back to that,” says Tim Seymour.

What’s the trade?

I’m short Goldman, says Brian Kelly of Kanundrum. I believe lower volumes will hit the bottom line. And I also feel all the bad press (from bonuses to Greece) is going to take its toll on share price.

In fact, on Thursday's Fast Money analyst Brad Hintz estimated GS could take a 4-6% revenue hit as big investors steer clear of working with Goldman because of negative press.

I think that could translate into a 10%, even a 15% hit on earnings, reminds Gary Kaminksy. Place your bets accordingly.

I’m concerned that when the tape was better Goldman went from $195 to $160, adds Guy Adami. I would not establish a long position unless Goldman closes above $160.

For more on Goldman's woes, click here.


______________________________________________________
Got something to to say? Send us an e-mail at fastmoney-web@cnbc.com and your comment might be posted on the Rapid Recap. If you'd prefer to make a comment but not have it published on our website send those e-mails to fastmoney@cnbc.com.

Trader disclosure: On March 1st, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Kaminsky Owns (EPV); Kaminsky Owns (LULU) Puts; Najarian Owns (BAC) Call Spread; Najarian Owns (INTC) Calls; Najarian Owns (JDSU) Calls; Najarian Owns (MRVL); Najarian Owns (NTAP) Calls; Najarian Owns (AKAM); Najarian Owns (MRVL); Najarian Owns (NTAP) Calls; Seymour Owns (AAPL), (BAC), (F), (INTC), (NIHD); Kelly Owns (FXY) Puts; Finerman's Firm Owns (MIL); Finerman's Firm Owns (OSIP); Finerman's Firm Owns (XBI); Finerman's Firm Owns (IBB); Finerman's Firm Owns (ARG) Calls; Finerman's Firm Owns (GGWPQ); Finerman's Firm Owns (SII) Call Spreads; Finerman's Firm Owns (ACL); Finerman Owns (AAPL); Finerman's Firm And Finerman Own (GOOG); Finerman's Firm Owns (QCOM); Finerman's Firm Owns (BAC), (BAC) Leaps; Finerman Owns (BAC) Preferred, (BAC); Finerman's Firm And Finerman Own (JPM); Finerman's Firm Owns (IBM); Finerman's Firm Owns (MIL); Finerman's Firm Owns (OSIP); Finerman's Firm Owns (XBI); Finerman's Firm Owns (IBB); Finerman's Firm Owns (ARG) Calls; Finerman's Firm Owns (GGWPQ); Finerman's Firm Owns (SII) Call Spreads; Finerman's Firm Owns (ACL);
Terranova Owns (GLD) March Puts; Karabell Owns (RIMM), (UYG), (AAPL), (NOK), (XES), (VALE), (TC); Jon Najarian Owns (AAPL), Is Short (AAPL) Calls; Jon Najarian Owns (BAC), Is Short (BAC) Calls; Jon Najarian Owns (C), Is Short (C) Calls; Jon Najarian Owns (GS), Is Short (GS) Calls; Jon Najarian Owns (MIL), Is Short (MIL) Calls; Jon Najarian Owns (MS), Is Short (MS) Calls; Jon Najarian Owns (QCOM), Is Short (QCOM) Calls; Jon Najarian Owns (RIMM), Is Short (RIMM) Calls; Jon Najarian Owns (WFC), Is Short (WFC) Calls; Jon Najarian Owns (WMT), Is Short (WMT) Calls; Jon Najarian Owns (TSL) Call Spreads; Jon Najarian Owns (SII) Call Spreads; Jon Najarian Owns (CRM) Call Spreads; Jon Najarian Owns (MU) Call Spreads; Nations Owns (MSFT), (SPY)

For Tim Seymour:
Seygem Asset Management Is Short (FCX)
Seygem Asset Management Owns (VIP)
Seygem Asset Management Owns (VIP)

For Brian Kelly:
Kanundrum Capital Owns (C)
Kanundrum Capital Owns (JPM)
Kanundrum Capital Owns (CS)
Kanundrum Capital Owns (DB)
Kanundrum Capital Owns (NBG)
Kanundrum Capital Owns (EWP)
Kanundrum Capital Owns (EWJ)
Kanundrum Capital Is Short Yen
Kanundrum Capital Is Short British Pound
Kanundrum Capital Is Short Euro
Kanundrum Capital Is Short (GS)

For Joe Terranova:
Terranova Works For (VRTS)
Terranova Is Chief Market Strategist Of Virtus Investment Partners, Ltd.


CNBC.com with wires