The Fed has approved Goldman Sachs and Morgan Stanley's requests to become bank holding companies. Bald and Co. also said that they will extend additional lending to the firm's broker-dealer, in order "to provide increased liquidity support to these firms as they transition to managing their funding within a bank holding company structure." Dealbreaker was additionally asked to pass on the message that if anyone from Goldman is reading right now and has any other demands-- pizza,* rim job,** whatever-- to get in touch, because if it wasn't obvious already, no one says no to GS.
Here's the Fed's official statement:
The Federal Reserve Board on Sunday approved, pending a statutory five-day antitrust waiting period, the applications of Goldman Sachs and Morgan Stanley to become bank holding companies.To provide increased liquidity support to these firms as they transition to managing their funding within a bank holding company structure, the Federal Reserve Board authorized the Federal Reserve Bank of New York to extend credit to the U.S. broker-dealer subsidiaries of Goldman Sachs and Morgan Stanley against all types of collateral that may be pledged at the Federal Reserve's primary credit facility for depository institutions or at the existing Primary Dealer Credit Facility (PDCF); the Federal Reserve has also made these collateral arrangements available to the broker-dealer subsidiary of Merrill Lynch. In addition, the Board also authorized the Federal Reserve Bank of New York to extend credit to the London-based broker-dealer subsidiaries of Goldman Sachs, Morgan Stanley, and Merrill Lynch against collateral that would be eligible to be pledged at the PDCF.
And this is what Goldman had to say. Apparently the current state of the market merely pushed them in a direction they were already going:
"When Goldman Sachs was a private partnership, we made the decision to become a public company, recognizing the need for permanent capital to meet the demands of scale. While accelerated by market sentiment, our decision to be regulated by the Federal Reserve is based on the recognition that such regulation provides its members with full prudential supervision and access to permanent liquidity and funding," said Lloyd C. Blankfein, Chairman and CEO of Goldman Sachs. "We believe that Goldman Sachs, under Federal Reserve supervision, will be regarded as an even more secure institution with an exceptionally clean balance sheet and a greater diversity of funding sources."
Still waiting for Dick Fuld's thoughts on the matter.
*See if you can guess who they're going to make deliver it.
**To be administered by ____ ______?
Posted by guest , Sep 21, 2008 10:23PM
1st
Posted by guest , Sep 21, 2008 10:25PM
Article on Dealbook:
http://dealbook.blogs.nytimes.com/2008/09/21/goldman-morgan-to-become-bank-holding-companies/
Posted by guest , Sep 21, 2008 10:28PM
means they were not going to make it past tomorrow. liquidity=0
damn it feels good to be a banker
Posted by guest , Sep 21, 2008 10:32PM
Wow. This means and old schlub can have a Goldman checking account? Goldman Sachs ATMs? Incompetent tellers? I can get a car loan from GS? This is all too much to process.
Posted by guest , Sep 21, 2008 10:34PM
@3
If that is true, does this ruling matter? It's not like as if they can get millions of deposits straightaway.
Posted by guest , Sep 21, 2008 10:36PM
@5
They can if they buy a bank or three in the next week.
Posted by guest , Sep 21, 2008 10:38PM
you bet it matters. read the statement
Posted by guest , Sep 21, 2008 10:40PM
@6
And who can they buy? All the candidates like WM and WB have toxic assets in them. Are they going to take the risk? I don't think so. They'll probably do a Barclays and wait for them to go BK
Posted by StupidEquityGuy , Sep 21, 2008 10:40PM
The thing that annoys me, is that I am the smallest institutional account GS has... I am kind of proud of that... it now sounds like anyone can have a GS institutional account...
They just diluted stupid people everywhere...
~SEG
oh and TARP is growing... they are already adding new panels of coverage... its the Total American Rescue Plan in action... http://bloomberg.com/apps/news?pid=20601087&sid=aYXtwpG9mw9g&refer=home
Appears the new submitted version is even bigger and even more vague...
We are all subprime now... and common people can go to goldie... whats left?
Posted by guest , Sep 21, 2008 10:41PM
great comment at joe's. now they can compete with walmart banking
Posted by guest , Sep 21, 2008 10:42PM
Goldman Sachs already has two active deposit taking institutions – Goldman Sachs Bank USA and Goldman Sachs Bank Europe PLC – which, together, hold more than $20 billion in customer deposits. We are moving assets from a number of strategic businesses, including our lending businesses, into GS Bank USA. With over $150 billion in assets, GS Bank USA will be one of the ten largest banks in the United States. While these assets are fully funded for term, they also are available to be funded by the Federal Reserve. We intend to grow our deposit base through acquisitions and organically.
Posted by guest , Sep 21, 2008 10:44PM
Capitalism is sham. I'm filing a class action suit against the SEC for securities fraud if anyone who owned the Sept 08' options want in, post in the comments.
Posted by guest , Sep 21, 2008 10:45PM
Capitalism is a sham. I'm filing a class action suit against the SEC for securities fraud if anyone who owned the Sept 08' options want in, post in the comments.
Posted by guest , Sep 21, 2008 10:45PM
Jamie Dimon must be furious right now. Instead of a trophy acquisition, he got two more competitors, one of which is named Morgan.
Look for MER shareholders to try to vote down merger and become BofML.
-
Having Goldman Sachs checks and cards has a certain appeal to it, I must say.
Posted by guest , Sep 21, 2008 10:49PM
@ 8
They can package up any number of cash-rich higher-end commercial banks who already sell GSAM products via institutional channels. Just a start, but it gets them a network to start bringing in deposits off their own base. Plus, they're getting lead time off the Fed to get going.
Posted by guest , Sep 21, 2008 10:50PM
MS may not get cash infusion from China which made some Chinese happy. They'd better keep their billions in there country and invest in infrastracture and technology.
There is still no clear sight as to when this problem going to end.
Posted by guest , Sep 21, 2008 10:52PM
I already have Goldman Sachs checks and a GS-branded AMEX.
Posted by guest , Sep 21, 2008 10:54PM
We'll see if this "extraction of cancer cells" by Drs. Fed and Treas will be successful.
Posted by Investorcluzo , Sep 21, 2008 10:59PM
okay, entourage just ended. must every sunday be interrupted by this mortgage morass and the malaise that comes with it? quickly (because I’ve got $hit to do):
@3 – they weren’t going to be illiquid tomorrow, they made money last quarter and the short selling rule change has allowed their stock to jump. therefore, they are less likely to get a downgrade now b/c the folks at S&P (in their infinite wisdom) will view that as a positive. as a result, they won’t be facing a collateral call anytime soon.
@4 – slow your roll, lloyd knows that he has a platinum plated name and will likely take a first republic bank attitude. you know, cater to the hnw set – large sticky deposits which can provide a solid long term funding base. don’t look for a bunch of atm machines around main street with the gs logo…
@17 – don’t confuse your brokerage account with that of federally insured deposits at a true “bank”.
what does this mean for mack daddy, or better yet, watchovaya? if he calls off his dogs and no deal emerges (which is best for the white shoe set), the man of steele will have to face the music on his $112 billion portfolio of sub-prime assets sans the smoke and mirrors of a transaction.
for gs, it means that they don’t need to go whoring around for some 2nd tier bank to provide liquidity because hank hearts goldenslacks.
finally, with lower leverage and (most likely) earnings. I suspect multiples will drop (dramatically). thankfully, the banks are well below historic p/e multiples. also, what happens to the gs prop trading desk? will they spin off?
Posted by Investorcluzo , Sep 21, 2008 11:02PM
oh, and one more thing: go COWBOYS!!!
Posted by guest , Sep 21, 2008 11:04PM
HOLY. FUCKING. SHIT.
Posted by guest , Sep 21, 2008 11:05PM
assume depositors have the FDIC 100K protection then to attract biz?
Posted by guest , Sep 21, 2008 11:06PM
Bess makes me rise for the occasion.
Fuck Carney, I'm with DB.
(BTW, insanely fucked up decision to grant them Holding co status)
Posted by guest , Sep 21, 2008 11:08PM
@23 is it the fed's decision to make? As long as GS+MS comply with the rules of holding co status then would the Fed be able to stop them?
Posted by Investorcluzo , Sep 21, 2008 11:09PM
@22 - correct.
Posted by guest , Sep 21, 2008 11:09PM
No wait a minute. Being a bank means completely different leverage and capital requirements. Where are MS and GS going to come up with that capital from overnight?
This is retarded. Paulson will do anything to save Goldman and MS gets a free ride for the sake of political cover. MER shareholders should totally vote down the BofA deal.
#19, whay kind of retard are you? Their 'making money' (we all know how) and they stock price or their ratings dont matter in this environment. What matters is that counterparties have effectively stopped trading with them and hedge funds are pulling out from their prime brokerage accounts and heading over to Jamie Dimon's embrace. The things you mentioned would do precious little to help out the 'liquidity' issue.
Posted by guest , Sep 21, 2008 11:10PM
$20 the First Republic people are writing mass resignations right now and are lining up in front of 85 Broad with their resumes. The BoFA has to have them running for their lives anyway.
Posted by guest , Sep 21, 2008 11:10PM
Boy, it's a crying shame you can't short GS and MS stock...
Posted by guest , Sep 21, 2008 11:12PM
I'm an interested beginner to all of this...
This essentially means that prior to the change, ibanks such as goldman weren't able to acquire traditional banks, but now they are?
Posted by guest , Sep 21, 2008 11:16PM
Pretty much a concession that Wall Street is over. This is going to mean a tremendous hit to earnings once they can't operate at crazy ratios anymore. The only reasons to do this are that they were convinced (a) they were going to go under otherwise; (b)their business model is fundamentally broken/will be regulated out of existance; or (c), both of the above.
Posted by Investorcluzo , Sep 21, 2008 11:18PM
@26 - I love your "retard" comment, are you “like” 15? while I usually don't respond to immature nonsense, the kids at home need more. to say ratings don't matter is lunacy. do you know what rating agencies are and how they affect trading? the stock price reference relates to the fact that part of S&P’s rating process involves looking at the sentiment as reflected in a company’s stock price (look it up). and if think jaime's embrace can handle all of gs/ms counterparty risk you are sadly mistaken. not to mention, I know plenty of top tier shops still trading with them.
Posted by guest , Sep 21, 2008 11:18PM
To get to BACs leverage GS needs to either raise $100B in equity of shed about $700B of assets? How the fuck is that going to happen?
I mean what is this whole thing supposed to be? Paulson and Bernanke wake up every day with some random new plan in violation of all existing rules and regulations? How can you be simple 'approved' to become a bank and granted access to the fed's facilities without getting your leverage in line?
Wtf??????
Posted by guest , Sep 21, 2008 11:18PM
Bess you make me laugh. Hank Paulson, however, make me weep.
Posted by guest , Sep 21, 2008 11:22PM
10-1 leverage at GS, here we come!
Posted by guest , Sep 21, 2008 11:23PM
#31, I dont know what you are trying to get at (do you work at GS?) but I never said that ratings dont matter - in normal times.
The fact is that right now, not too many people are giving a rat's ass about what ratings agencies have to say. Ratings agencies are following the curve and are not ahead of it.
And you crack me up with the "I know plenty of top tier shops still trading with them" statement. Didn't a bunch of 'top tier' shops actually state that they are FULLY trading with lehman 2 days before it declared bankruptcy?
Funny. Oh, and are you implying that GS gave up its leverage and entire business model even though everything was hunky dory as you were trying to imply in #19? Good joke indeed.
Posted by guest , Sep 21, 2008 11:24PM
Damn! I was hoping these 2 shops will just die off and Dimon will rise to be the new king of Wall St.
@32
That's easy. When you're best buds, they bend over for you
Posted by guest , Sep 21, 2008 11:27PM
GS and MS will be far less profitable places to work, that's for sure.
Lloyd Blankfein made around $70 million last year. A tad bit more than Jamie Dimon's $27 mil, no?
Posted by guest , Sep 21, 2008 11:28PM
I fucked Bernanke in the ass
Posted by guest , Sep 21, 2008 11:34PM
I'm fucking pissed that the Feds/Treasury are bending rules back and forth in order to keep these 2 banks alive. Can they actually approve these 2 banks before they meet all the requirements (such as the leverage ratio)?
Whatever happened to the Supreme Court?
Posted by Investorcluzo , Sep 21, 2008 11:35PM
@35 – no I don’t work for gs, but do belong to a golf club that is heavily populated by the hf set (and they weren’t talking about moving positions – as they were pre leh bk). do you think before you post? seriously, when citadel had it’s little tiff with jpm and said that less than 10% of its business was with jaime d, where do you think they had their other funds, watchovaya? hopefully, the hedgies know about diversification and concentration risk. as for the “implication”, no – I’m not implying anything; you’re inferring. clearly they had issues (largely due to run on the bank mentality), but it wasn’t armaggedon (or as @3 said – illiquid tomorrow).
cowboys won, I'm out.
Posted by guest , Sep 21, 2008 11:37PM
Market predictions on both this and the limits on unlimited MMF insurance anyone?
Posted by guest , Sep 21, 2008 11:42PM
#40 Do you caddy there? Cowboys suck..Go Giants!!!
Posted by guest , Sep 21, 2008 11:42PM
#40 Do you caddy there? Cowboys suck..Go Giants!!!
Posted by guest , Sep 21, 2008 11:42PM
#35
Raings agencies aren't behind the curve. They are scared shitless with potential litigation for their monumental fuck up with the mortgage-backed securities. Hank must have threatened to bring the bangbus over and hit them in the arse if they dared to give GS and MS a lower credit rating.
Last time, the ratings agencies colluded with the banks, this time, the ratings agencies are colluding with the Treasury. Gold!
#34 & #37
GS's profitability will fall due to the new regulations they now have to comply with. But I'm sure Lloyd would have given a lot of thought on how to structure GS so they can continue to hold onto their FICC business (such as GS holding 49% and a related entity holding another 10-20% of the FICC) and make sure it falls outside of the regulated part of GS.
Posted by guest , Sep 21, 2008 11:45PM
Sucks to be a LEH employee. You poor guys really got the raw end.
Sucks to be a GS long. Buh-BYE E on the P/E. At least you could hedge...oh, wait. Nevermind. The SEC just ordered me to cancel the hedge. #^&@.
Sucks to be a b-school student or baby banker. Downturn, and now the leverage-fed comp structure just vaporized.
Posted by Investorcluzo , Sep 21, 2008 11:47PM
@42/43 – hey heavy hands, can you read? submit only once…talk to me come playoff time. your midgets got lucky last year, lightening isn’t going to strike twice.
Posted by guest , Sep 21, 2008 11:50PM
So where/when does Timmay come into the picture?
Posted by guest , Sep 21, 2008 11:52PM
Yea, that was real lucky...Get it together.
Posted by guest , Sep 21, 2008 11:54PM
@48- what are you talking about?
Posted by guest , Sep 21, 2008 11:59PM
#45 - GS P/E is already very low at 8. JPM is at 14. BAC is at 12..So plenty of room to run..
Posted by guest , Sep 22, 2008 12:00AM
Banks give away sweet swag when you open a checking account. I'll sell my GS condoms on ebay.
SPODE
Posted by guest , Sep 22, 2008 12:02AM
In Andrew Ross Sorkin's article in the NY Times.
He said in the very last paragraph, "With their transition to operating as bank holding companies, those talks are likely to take a different form, because now Morgan can buy a commercial bank."
I now ask the question:
How on earth do you buy anything, let alone a commercial bank, when you are broke by all conventional measures??!!
Posted by StupidEquityGuy , Sep 22, 2008 12:03AM
The Last of the Old Wall Street Died Tonight... Long live the New Wall Street
I will remember tonight well... for the end happened to all of them in a sudden burst of announcements. In the end, not one of the immortal banks were left alive as they were. Now, they all had the stamp of the FED on their forehead and the seal was done.
The death of the immortals will hardly be noticed by anyone outside of our hallowed halls, however it has happened now. In the span of less then one month they all died and were absorbed or merged or killed or bought or killed, but have no doubt, they are all gone now. GS and MS having made it as far as possible, have now agreed to become larger mortal banks.
AIG, GS, LEH, MER, MS, FNM, ecta...
Outside of a good panic and flushing, it appears that allot of the necessary titans have been addressed. I am not sure what sends main street into its panic, but we are about finished with wall streets self immolation of destruction. I wonder what rises out of these ashes we have built... to become the next generation of wall street.
Will the self funded versions of SAC dominate now?
Posted by guest , Sep 22, 2008 12:04AM
Will we at least get a clearing house for CDS out of this kleptocratic shit show?
Posted by Investorcluzo , Sep 22, 2008 12:06AM
@50/45 - banks trade on book value multiples (which have also fallen significantly - if you believe stated book). in the hey day, bank deals were done at 2x-3x book. that won't be coming back soon. so @50 your logic still holds (until more write downs come).
now, I'm really out.
Posted by guest , Sep 22, 2008 12:09AM
@52
Maybe an all-share acquisition?
Does this mean the the new unregulated lords of Wall St belongs to SAC and Citadel now while GS and MS descend to mere mortals?
Posted by guest , Sep 22, 2008 12:10AM
50 = Idiot day trader. By all means, buy Goldman Sachs on the theory that the stock is cheap because they will be able to keep the model that provides that "E."
Posted by guest , Sep 22, 2008 12:17AM
you ass-butts have no idea where goldman will trade, i wish you'd shut up. No shit like this has happened in our lifetimes so i which people would stop pretending they know how the market will react. If you're so good at valuing broker/dealers/commercial banks and black box MBS securities why aren't you John Paulson?
I rest my case.
Posted by guest , Sep 22, 2008 12:20AM
Goldman and Morgan should take a dirt nap if that's what the market has in store for them. Remove the 'no shorting' BS and let the masters of the universe reap what they've sown...
Posted by guest , Sep 22, 2008 12:21AM
GS and MS have (finally) come in from the cold...long live commercial banks!
Off the wall question...does all this re-arranging get the Fed/Feds any closer to regulating hedge funds?
Posted by guest , Sep 22, 2008 12:22AM
@58 - Goldman employee? No bitch-assness...
-Diddy
Posted by guest , Sep 22, 2008 12:32AM
#50 is really me. GS will close up 12 tomorrow.
SPODE
Posted by guest , Sep 22, 2008 12:33AM
shamwow
Posted by guest , Sep 22, 2008 12:34AM
Brown Brother anyone?
Posted by guest , Sep 22, 2008 12:35AM
Brown Brothers anyone?
Posted by guest , Sep 22, 2008 12:38AM
@60:
I think they went from on deck to up to bat. Washington now has to appear "proactive". One hedge fund so much as hiccups before the memory of this crisis fades and they'll have Hedgegate hearings on capitol hill.
Posted by guest , Sep 22, 2008 12:41AM
The party is over! I'm tired of the loyalty discount at every year end. Let's move to the buy side, call those sell side motherfuckers, say "Fuck you" and hang up!
Posted by diablo , Sep 22, 2008 12:42AM
Sachovia here it comes.
Posted by guest , Sep 22, 2008 12:44AM
What about MS. They still have around 30:1 leverage. In addition they are trading at an absurdly high p/e mulitple.
As for p/e multiples, as the recession deepens will they not broadly contract?
Posted by guest , Sep 22, 2008 12:50AM
That explains the pre-approved application for a Goldman Sachs Discover Card I just got in the mail.
Sigh... so much for Wall Street as we know it.
Posted by guest , Sep 22, 2008 12:50AM
@69
Think cashflow. Not p/e
Posted by guest , Sep 22, 2008 12:51AM
Effect by years of experience:
1-4 years - haven't been around long enough to have too much net worth tied up in this, young/mobile enough to scramble in the industry or change careers
5-15 years - this is the group that really gets hurt, never got to cash in on restricted stock like the next group, difficult to replace current income level in a move and has too many family responsibilities to change careers
15+ years - been around long enough to have really benefited from restricted stock, most have had earning plus remaining stock (even at a depressed level) to maintain lifestyle
Posted by guest , Sep 22, 2008 12:55AM
#50, really? You are going to bring in the 'P/E' argument here?
Last I checked, the 'E' part was being generated on more than 3X the leverage that bofa operates on. So if you were to do some rudimentary (and imprecise) math and equalize the leverage, then it would appear that GS would have to fall to half of its current 'P' to get to the same 'P/E' as bofa.
So what are you, aspiring summer intern or retail?
Posted by guest , Sep 22, 2008 12:56AM
Why do people keep saying MS is 30:1 levered? I thought their leverage ratio was around 24 as of end of last quarter. Is this another "fact" posted by the NY Times?
Posted by guest , Sep 22, 2008 1:01AM
#73
Yeah. You showed that bitch.
Now Bear Stearns is unusual in that a lot of the shares are owned by insiders in the company, and the theory we had at the desk here is that the Treasury Department—not the Fed, the Fed’s not so tough, but the Treasury Department went to the top guys at Bear and said: "Either a deal gets done that saves Bear and calms the financial system by the end of this weekend, or we will find some reason to put you in jail." And I think one of the things that every officer of a public company is very sensitive to, post-Enron, is jail. There has been a criminalization of failure. And after Sarbanes-Oxley, and in the wake of prosecutions related to business failures, it was like Beria said: You show me the man, I’ll find the crime.
So I think for these guys it wasn’t just, "I’m risking 2 dollars if I say no," it was, "I’m risking 2 dollars plus anal rape in jail."
Posted by guest , Sep 22, 2008 1:02AM
US dollar is going to crash.
Posted by guest , Sep 22, 2008 1:06AM
#76
No it won't. There's no better alternative at this moment. The other economies are equally dead beat.
Posted by guest , Sep 22, 2008 1:12AM
@53--They simply should have known better. They, and the ratings firms, were just chasing the short-end money.
Posted by guest , Sep 22, 2008 1:16AM
#50 hear. No i reworked enteprise value divided by free cash flow and backed that into a PE comparison between the two company's. zscore showed them both going tits up by halloween. trust me those numbers are ghoulish.
aspiring summer intern. correction buddy i was a summer intern. i was so good Macey's invited me back for next summer. -i use to work nights and rub it in the womens section on the panties-. send me your resume i can hook up. incluse some nude pics of your girl; that can only help your chnaces.
SPODE
Posted by Investorcluzo , Sep 22, 2008 1:21AM
@74 – b/c people like to use “talking (posting) points” without fact checking. to your point, I calc’d ms at ~28x (based on latest q). that leads me to separate topic: ms/wb marriage.
when you look at wb, they are at 9x (6/30). together (before purchase acct adj) they would be roughly 15x. this is higher than banks operate (read more deleveraging to come). then you add the fact that they would have combined level 3 assets of $97 billion (second q numbers – which means understated) supported by only $113 billion of combined equity (of which, $37 billion is goodwill - not including new gw for the deal). that all adds up to one hot mess. why? because wb has $122 bn of subprime mortgages in ca. did I mention that the state has one of the largest unemployment rates (7.7%). this suggests those mortgages won’t get better any time soon. on a national level, 10% of subprime mortgages are currently in foreclosure and 25% are delinquent. one could conservatively assume wb will be looking at a nice mark on that portfolio (let’s use 20% - which is giving them the benefit of the doubt - or $24 bn) which leaves even less equity which further increases the leverage ratio. tell me again why ms should do the deal? so much for the banks being good risk managers…just because you have a "solid funding base of deposits" doesn't mean you have a sold capital base.
@spode - classic. you must have watched entourage tonight.
nighty, night kids
Posted by guest , Sep 22, 2008 1:33AM
@80
First of all, I hate investors and I hate cluzo.
Secondly, having a dying capital base is better than having no capital base. (Think of WB as a merger of last resort)
Lastly, entourage? seriously?
Posted by guest , Sep 22, 2008 1:38AM
"@74 – b/c people like to use “talking (posting) points” without fact checking. to your point, I calc’d ms at ~28x (based on latest q)."
You're too far down the rabbit hole if you're seriously arguing over whether MS is currently leveraged 30:1, 28:1 or 24:1. Overconfidence in the precision estimates is what got us in this mess in the first place.
Posted by guest , Sep 22, 2008 1:42AM
@81 - What did I say?
http://www.youtube.com/watch?v=SAlLBXm4Ygk
-Diddy
Posted by guest , Sep 22, 2008 1:49AM
@81
Last resort I went to was in the DRC local rebel played the sound of music on AK-47's. I was so akneebreeated I couldn't find my entourage, i had no clue so kicked it at McDonald's with a McRib sandwitch.
In the DRC the McRib is never a limited time. Year round bitches!
Rollin in the DRC with a McRib
SPODE
Posted by guest , Sep 22, 2008 2:00AM
GS and MS had some smart lawyers considering putting in place their next move, and they followed their lawyers' advice. Profits in the short term won't be as good but at least they won't be eaten by the tigers. GS and MS will live to see another era born. When the new day comes, it's likely they'll put themselves in whatever legal form will maximize profits and minimize risk.
As for the hedge funds, their day of reckoning will come. I hope everyone is appropriately diversified!
Posted by SlashAndBurn , Sep 22, 2008 2:04AM
Fury at $2.5bn bonus for Lehman's New York staff
By David Prosser
Monday, 22 September 2008
Up to 10,000 staff at the New York office of the bankrupt investment bank Lehman Brothers will share a bonus pool set aside for them that is worth $2.5bn (£1.4bn), Barclays Bank, which is buying the business, confirmed last night.
http://www.independent.co.uk/news/business/news/fury-at-25bn-bonus-for-lehmans-new-york-staff-937560.html
Posted by guest , Sep 22, 2008 2:05AM
@85
I'm very sad the tigers won't have their feast. It's truly a sad day for capitalism.
Posted by guest , Sep 22, 2008 2:10AM
This is just the sequel to Bush's War in Iraq. The total cost will eclipse three trillion dollars.
The eventual "all in" cost of this bail-out will probably be around that.
Ask yourself, what would congress do after $700 billion has been thrown into the rescue and there's still no turnaround? You double up and put more money in. There's not gonna be an upper limit. It will be as much as required.
The only people who are gonna profit from this are the lawyers and consultants. Just like the civilian contractors made a bundle in Iraq. To the young'uns out there, finish your MBAs and then go get a job with a big name consultancy firm.
Posted by guest , Sep 22, 2008 2:14AM
"Lehman is f-u-c-k-e-d, fucked, fucked, yeah they're fucked"
$2.5B bonus pool in 2008. $9.5B bonus pool in 2007. That's a 75% drop Y/Y. Not to mention the RSUs, options and other "non-cash" compensation that are worthless.
Dec. 13 (Bloomberg) -- Lehman Brothers Holdings Inc.'s 2007 bonus payout, the first reported by a Wall Street firm, rose almost 10 percent from last year as revenue gains through August overcame a fourth-quarter decline.
Compensation, including salaries, benefits and bonuses, climbed 9.5 percent to $9.5 billion from $8.7 billion a year earlier, the New York-based company said today in a statement. Bonuses typically account for about 60 percent of compensation, or $5.7 billion compared with 5.2 billion in 2006.
Posted by guest , Sep 22, 2008 2:18AM
@82 - I don't think the point was to get to the exact number. The point was that people are forming their opinions and making their decisions based on these "facts" posted by the media. It's a responsibility of the press to get them right or at least check them beforehand. And btw, 30 vs 24 is a huge difference when it comes to the leverage ratio of a firm that size.
Posted by diablo , Sep 22, 2008 2:32AM
Take this EP (if you come back):
McCain wants to replace Cox with Cuomo.
http://www.youtube.com/watch?v=FirfXlBTs3Q
Posted by guest , Sep 22, 2008 2:40AM
@91
McCain probably wants Phil Gramm to be the next Treasury Secretary too.
I'd go very long on UBS stock if this happens.
Cronies at work!
Posted by guest , Sep 22, 2008 2:47AM
I think what this means is:
1) WAMU and Wachovia are toast by Friday
or
2)WAMU and Wachovia will be bought by either MS or GS AFTER Czar Paulson buys their toxic paper and ass(ets) and so his pals at MS and GS can have access to capital in insured and backstopped deposits and the prime assets.
I am going to take a real wild guess here and say #2 is what is next.
Posted by guest , Sep 22, 2008 2:57AM
This is so ridiculous. I've written a bit about this along with Cliff Asness's commentary on the current crisis in my blog, check out the article:
http://brunovalle.wordpress.com/2008/09/22/cliff-asness-stream-of-consciousness/
Posted by guest , Sep 22, 2008 3:16AM
Nomura acquired Lehman's Asia business.
Posted by guest , Sep 22, 2008 4:51AM
Is this a positive or negative for ms/gs? seems positive in the sense they'll survive by being able to buy smaller banks, but negative in the sense that their huge profit-making ability is going to be wiped out by deleveraging. This means employee comp will never return to the levels it was once at. Does that mean everyone should run work for HFs for higher comp? Or will they be the next to be regulated?
Posted by guest , Sep 22, 2008 5:56AM
I wonder what the interest rates will be on the new goldman sachs credit cards. Will they give me a toaster if I deposit $50k??
Posted by guest , Sep 22, 2008 5:56AM
If the last two Mohicans are regulated, they presumably will have to de-leverage to the tune of say around 8:1 or 12:1
Had understood earlier they are nowhere near that yet. Would be interesting to see how much time they have to get there - irrespective of their newfound access to the FED discount window as boring banks...they will need to get rid of those assets stinkin' in the closest now.
You'd think that's where the USD 700B super SIV comes into play. But hey no its not - because if they can sell their remaining toxic stuff to the super SIV, why do they need to give up their current status in exchange for access to the discount window.
Is the future so dark they need the access to the discount window even if the super-SIV is there, or are they just hedging their bets (finally) - and there's a sideletter somehwere allowing them to turn away from regulation once all this shit has settled and NY is reclaiming the capital of free world status with all its brilliant arrogance again.
What piece is missing or is it just my paranoia.
- A.L.
Posted by guest , Sep 22, 2008 6:52AM
Deal Broken indeed.
I'm shorting myself now.
Posted by guest , Sep 22, 2008 7:32AM
@89 -- $5.7 in bonus for 25k employees last yr, vs. $2.5 for 10k employees at barclays
Posted by guest , Sep 22, 2008 7:44AM
I love the comments here - very educational to this moran. But my question: with this bailout, how am I going to personally profiteer off of others' misery? I'd wanted to buy one of those toxic mortgages, foreclose on the sombitch & throw his homeless ass out on the street, and end up with a McMansion on the cheap. If I'm liquid right now, how'm I gonna profit with the feds buying debt at inflated rates?
Posted by guest , Sep 22, 2008 8:17AM
Think twice before planning to go to work for hedge fund now that Ibanking is gone.
Hedge funds are absolutely going to be regulated, and some of the measures I've heard suggested are closer to extermination of the industry as we know it, i.e. banning pension plans, nonprofits, endowments from investing in them.
Hedge funds are primary targets.
Posted by guest , Sep 22, 2008 8:27AM
Suck it Goldman...
Posted by guest , Sep 22, 2008 8:29AM
The Lehman "bonus pool" of $2.5B for 10,000 employees in NYC is the $250K per headcount that HR uses to cost out the average employee (salary, benefits, desk space, tech setup, etc...). Coincidence?
Posted by guest , Sep 22, 2008 8:32AM
@102 you are a liar and a coward....where are you hearing such hogwash
Posted by guest , Sep 22, 2008 8:37AM
The next two groups to suffer:
Manhattan real estate - WHU-OH, no more bulge bracket. D'OH!
Lockstep comp lawyers - Suddenly the only people making more than them are the (regulation pending) hedgies. Their firms also no longer have to "compete" with bulge brackets for "talent."
Posted by guest , Sep 22, 2008 8:48AM
@102
Stop spreading ridiculous rumors.
Posted by guest , Sep 22, 2008 9:04AM
bye bye visa holders, have a nice flight back to the homeland...
Posted by guest , Sep 22, 2008 9:16AM
Who will offwer me a better toaster Goldman or Morgan?
Posted by guest , Sep 22, 2008 9:16AM
Who will offer me a better toaster Goldman or Morgan?
Posted by guest , Sep 22, 2008 10:42AM
Free toaster and online bill-pay when you opt for our CDO^3 Money Market in your new MS Bank checking account!!!
Posted by guest , Sep 22, 2008 11:18AM
105, 107 = Delusional hedgies.
If you can't see the "regulation" train coming in DC, you're blind. You are probably the least popular people in America right now. If you think any amouny of lobbying is going to save your butts after the commodities bubble/bust and short selling multiple financial institutions into the ground, you are kidding yourselves. Never mind that the government has shown a willingness to literally obliterate entire types of hedge funds overnight as collateral damage from regulations.
You fools hurt too many people in an election year.
Posted by guest , Sep 22, 2008 11:40AM
The end of an era, Wall Street is all commercial banks now...
Posted by guest , Sep 22, 2008 11:41AM
@112 I blame Dick Fuld
PS. ther eis no way they will ban people from investing in HF's
Posted by guest , Sep 22, 2008 12:13PM
Just called GS to see if I could open an account:
Me: What's the minimum deposit?
GS Rep: $5MM
Me: Does Home Equity count?
GS Rep: ...no.
I could hear her mentally hanging up before explaining what the requirements were. "Liquid assets," for those who are curious.
Fun how if you converted that to cash, it would still be liquid... the interest wouldn't be worth it, but looks like mom and pop can't bank with Goldman yet.
Posted by guest , Sep 22, 2008 12:21PM
WHO KNOWS WALMART AND TARGET WILL BECOME BANKS TOO!
Posted by guest , Sep 22, 2008 12:47PM
Walmart and Target are run much better than the Investment Banks, sadly to say.
Posted by guest , Sep 22, 2008 12:57PM
@#86...
Thanks for the link to the UK article about the fury over the $2.5B LEH bonus pool. Here's and extract:
"In addition to the $2.5bn cash pool, Barclays is also in negotiations with about 30 executives it considers to be Lehman's best assets and plans to offer them contracts worth tens of millions of dollars."
Here's what I think. I hope Uncle Sam reads the article too, because those "30 executives" would be the best damn targets for a public lynching and also be the best targets for NY AG Cuomo to invite to spend a few nights without bail in a cage at the ass-banging, Rikers-Island Hotel.
@#112...
I'm with you. Hedge funds are about to go bust. The more the sooner the better. With pension-fund, nonprofit, and endowment money to be taken away from them, the hf's will have only the money from the hi-net-worth crowd to gamble with. New regs will squeeze them too. BTW, Uncle Sam and America are looking to Schadenfreude the h-n-w crowd anyway. Paraphrasing Marie Antoinette, "Let them eat shit."
In consideration of all that "wasted intellectual and ecomomic capital that went into speculation over the past decade", let the LEH 30 executives eat shit too.
The Guy from Delaware
Posted by guest , Sep 22, 2008 1:52PM
The financial landscape will shift towards more boutique investment banks. The days of the large pure-play investment bank are over. Now, Wall Street will be dominated by a few global commercial banks, and a good number of boutique investment banks offering M&A advisory, corporate finance, and niche specializations.
This sucks...
Posted by guest , Sep 22, 2008 2:34PM
@116
Petaining to WMT, since you asked for it:
http://www.time.com/time/magazine/article/0,9171,1184049,00.html
Posted by diablo , Sep 22, 2008 5:10PM
It's clear that a run on hedge funds is about to start... 10...9...8...7...