[via Reuters]
Earlier: Live-Blogging The Goldman Flogging
Related: Introducing The Lloyd Face
Archive for April 2010
According to the cover story of Bloomberg Markets Magazine’s Junes issue, entitled “Buffett and the Prince,” yes. Before we get into all that, however, just take a moment to appreciate the setting in which this interview took place:
Prince Alwaleed bin Talal sits under an almost full moon near a campfire at his rustic retreat in Riyadh, Saudi Arabia. He’s surrounded by a zoo with zebras and giraffes, an artificial lake and a lodge that has an indoor pool, saunas and steam rooms. Three hooded falcons are perched on stands in front of him. Five young women, dressed in black miniskirts and jackets and orange knee-high boots that match their nail polish, serve clove-and-cardamom tea to Alwaleed and his entourage.
Now, the Prince and his infatuation. Is it so much an obsession with the Oracle of O as it is one with simply being as rich as him? Obviously that’s part of it, though with a net worth of $16.6 billion, his highness has a bit of catching up to do to Buffett’s $48.7 billion (a disparity Big Al is not sweating. “When he was my age, he was not as big as me,” Alwaleed says. “I still have 20 years.”) And former aides say “being the best, being the wealthiest is what motivates [the Prince], whose preoccupation with his status and wealth is on display at Kingdom Holding’s headquarters, where bookshelves display reprints of magazine articles about his ranking on billionaire lists. After rankings are published, he sometimes issues a press release touting his position.” But there’s more than just a “I would like to have a few more billions in my name” thing going on than a serious “I want to be Warren Buffett, I want to posses Warren Buffett, if I can’t have Warren Buffett no one can” vibe emanating from Alwaleed. First off, he refers to himself as “the Buffett of Arabia.” And he takes pains to prove to reporters that he and Buffs are basically two bodies, one soul, as indicated by similarities such as the fact that they both use filing cabinets and they both wear pants (sometimes).
When a community bank gets seized by the FDIC, you expect its non-deposit assets to include some computers, office chairs, bank vaults, free lollipops, stress balls, stuff like that. But Bank of Lincolnwood, a Chicago-area community bank that was shut down last year, has some peculiar, and expensive, collectibles in its coffers.
Looking to douse yourself in a little second-hand embarrassment today? Business school follies are here to help! If the above offering from Darden doesn’t do it for you, perhaps the future business leaders of America at CBS can get the job done.
Update: Wharton has beseeched me to throw their effort into the running.
*Confidential to Darden guy– the limbo scene was pretty good stuff.
Greece Official: IMF Loan Boost Possible (WSJ)
“There has been talk that the IMF could boost its contribution in the support mechanism. But at this point we don’t believe it will happen. The talk is for another €5-10 billion,” said the official, who asked not to be identified. “But everything is still very fluid. If our partners and creditors feel that more money is needed to finally calm the markets and stop hurting the euro, more money could be approved. It is being discussed among all parties involved,” he added, without elaborating.
Europeans Fear Greek Debt Crisis Will Spread (NYT)
“It’s like Lehman Brothers and Bear Stearns,” said Philip Lane. “It is not so much the fundamentals as it is the unwillingness of the market to fund you.”
Barofsky’s First Days On The Job (Bloomberg)
“They eventually discovered a broken sewer main beneath the floor,” says Barofsky, 40, adding that he doesn’t think any slight was intended by relegating him to the malodorous quarters. Still, he says with a smile, “I wasn’t given the prime real estate in Treasury.”
Dick Bove: Goldman a $200 Stock, ‘You Should Own It’ (CNBC)
“I think the SEC suit will be thrown out of court, I think Goldman’s reputation will improve,” Bove said. “I think it’s a $200 stock. I think the company’s earnings are very good, I think you should own it, I think it’s a tremendous opportunity,” he added.
SEC Probes Side-Pocket Deals (WSJ)
Not the side-pockets!
How Many Times Did Sen. Levin Say ‘Sh**ty Deal’? (CNBC)
Apparently 11. Which seems low.
*5:33 – LB: “I don’t think our clients care nor should they care” about whether Goldman is short something. “You could have the biggest mutual fund in the world selling stock and you wouldn’t know it
Carl: “This is a shitty deal, this is crap, what you think about that.”
LB: “We are selling securities all the time that we don’t like” but people just want to buy things.
*5:41 – LB and Carl Levin go back and forth and back and forth on what being a market maker is and whether anyone care if Goldman is short something it was selling to someone else.
Carl: You’re selling, then shorting. LB: We’re buying and selling all the time.
Carl: “I wouldn’t trust you if you came to me trying to sell something.”
LB: The buyer doesn’t care. They don’t give a crap that we’re betting against this stuff.
*5:46 – John McCain pops in despite the fact he’s been gone the entire day. Asks Lloyd why he thinks Goldman needed the TARP money.
LB – “We were brought in” and had no choice but to take the gov’t money.
McCain – Brings up shorting the residential mortgage market. LB says they made $500 million in revenue in 2007, but “did not make big money.” McCain slips up and says “you took Pork, I mean TARP money.”
*5:52 – Has Goldman done anything, McCain asks, to help community banks and homeowners pay their bills? LB: “We delivered $1 billion of the firm’s money to philanthropy” with $500 million to help small businesses. “Are any of these things enough? Not for the suffering existing in the world, but we are trying to do our part.”
* 9:45: Fifteen minutes to go. Disappointingly, His Fantabulousness and Lloyd Blankfein are on separate panels, meaning no opportunity for potential backhands to the face. No matter. There’s gonna be a showdown. So while we wait:
[I have it on good authority that Lloyd and Lucas have rehearsed the above moves and will be performing them at intermission.]
* 9:57: The “Pink Ladies” have traded in their standard uniforms for prison garb. Good one, ladies.
* 10:03: Carl Levin (NO RELATION) is telling us why we’re here. Goldman Sachs took advantage of its clients, yada, yada, yada.
* 10:04: That’s right, cameraman, focus on The Fab (who’s grown his hair a little longer and is looking kind of hot).
* 10:09: Carl: “Goldman Sachs treats clients like objects (of profit).” Jackie Treehorn, a former prop trader, was the first to pioneer this model at the firm.
* 10:16: Goldman made money off its shorts. Dun Dun Dun.
* 10:26: Apparently Goldman didn’t just hurt its clients, it hurt everyone in the world. Take a moment right now to show us on the doll where Goldman touched you.
* 10:28: Going to interrupt Carl for a moment to announce that Melissa Francis gave birth last night to her second son (with husband Wray). The kid’s name is Greyson Alexander Thorn. May he grow up to be a Goldman banker.
* 10:32: Senator Susan Collins: I’m very discreet…but I will haunt your dreams.
* 10:38: According to Suzy, we’re not here to celebrate the fact that Goldman Sachs made some money during the crisis. Which means I’ve made a terrible mistake. Reader poll: cancel the stripper cake, even though she’s already inside? Or just say fuck it? Why should this lady get to say what’s what?
* 10:40: Senator Claire McCaskill is just going to throw words out there, arrange them in any way you like: bets, odds, bookies, tranches, waterfalls, golden showers, clown-facing, pit bosses, Las Vegas, street gamblers, KGB.
* 10:44: SENATOR MARK PRYOR: “I MAY NOT UNDERSTAND EVERYTHING ABOUT EVERYTHING ON WALL STREET.” Read more »
Forget shorting the housing market and fueling the financial crisis. What the Senate subcommittee needs to focus on this morning is why Goldman was selling self-described “shitty” products to its own clients.
“Boy that timberwo[l]f was one shi**y deal,” Tom Montag, Goldman’s head of sales and trading, wrote in an email about $1 billion CDO called Timberwolf the firm was trying to shove down the throats of its own clients. The email, written to the head of Goldman’s mortgage desk in June 2007, was released by the Senate panel.
How would you like it if your stock broker sold you some crappy stock he thought was going to tank just so his firm could get it off their books?
Part of the Timberwolf CDO was offloaded to Bear Stearns hedge fund manager Ralph Cioffi, whose fund imploded in the summer of 2007. He was subsequently charged by the Feds with fraud, although a Brooklyn jury found him not guilty. Montag is now Bank of America’s president of global banking and markets.
The email shows Kerry Killinger’s concerns about hiring Goldman as a banker were right on the money. “I don’t trust Goldy on this,” WaMu’s chief wrote in an Oct. 12, 2007, e-mail. “They are smart, but this is swimming with the sharks. They were shorting mortgages big time while they were giving CfC advice,” he said.
Killinger was referring to Countrywide Financial, which hired Goldman in late 2006 to help it raise capital to continue funding mortgages. That assignment gave the firm an inside view of Countrywide’s books and marks on their mortgage products. Although he doesn’t say it explicitly, Killinger hints that Goldman was using that information to trade for its own account.
Goldman Sachs CDO Labeled ‘Shi**y Deal’ by Montag in E-Mail [Bloomberg]
Fabrice Tourre: “I deny — categorically — the SEC’s allegation. And I will defend myself in court against this false claim.”
By Bess Levin
Here’s what Mr. Fantabulous is going to say in about an hour. Imagine this read with what one hopes is (fingers-crossed) a thick accent and an general attitude of “Let’s make zees quick, I have a match to be at by noon. Idiots.” Read more »
Meet The Real Villain Of The Financial Crisis (NYT)
Bethany McLean: “The transaction at the heart of the S.E.C.’s complaint is a microcosm of the entire credit crisis. That is, there are no good guys here. It’s dishonest and ultimately dangerous to pretend that Goldman is the only bad actor. And the worst actor of all is the one leading the charge against Goldman: our government…Come to think about it, shouldn’t Congress have its turn on the hot seat as well? Seeing Goldman executives get their comeuppance may make us all feel better in the short term. But today’s spectacle shouldn’t provide our government with a convenient way to deflect the blame it so richly deserves.”
A Crowd With Pity For Goldman (NYT)
“I don’t want to use the word childish … but it’s childish.” That’s how Kenneth Griffin described the SEC’s decision to pursue a civil fraud case against Goldman. “I think that the disclosure around one transaction being the justification to vilify Goldman Sachs or to pass regulatory reform is just incredible,” Mr. Griffin said. “I think the Goldman Sachs case has clearly energized the Democrats with respect to passing the regulatory reform.”
Tourre: A Hero in Villain’s Garb? (WSJ)
Dennis Berman: “Mr. Tourre, as they say on Wall Street, gets the joke. His job constructing highly structured mortgage products is a farce. And he feels uneasy about it. “[T]he real purpose of my job is to make capital markets more efficient and ultimately provide the US consumer with more efficient ways to leverage and finance himself, so there is a humble, noble and ethical reason for my job :)” he writes to his girlfriend Marine Serres in January 2007. At Goldman’s top levels, there is little farce. Instead, there is what the firm proudly touts as “conflict management”—the thorough, technical handling of competing interests inside and outside the firm.”
Deutsche Bank profit up 49% on investment-bank strength (MarketWatch)
The Germans reported profit of 1.76 billion euros ($2.34 billion), compared with 1.19 billion euros a year earlier and ahead of the 1.39 billion euro consensus estimate of analysts. “This is a low level by peer group standards and, given regulatory developments, suggests limited dividend progression for 2010,” said Nomura analyst Jon Peace in a note to clients.
Deutsche Bank faces U.S. mortgage securities suit (Reuters)
No worries, though, the Krauts aren’t sweating the potential U.S. class-action lawsuit over mortgage-related securities.
Roubini: Greece Just Tip of Debt Crisis Iceberg (CNBC)
“The recent problems faced by Greece are only the tip of a sovereign-debt iceberg in many advanced economies,” Roubini told readers of RGE Monitor. “Bond-market vigilantes already have taken aim at Greece, Spain, Portugal, the United Kingdom, Ireland, and Iceland, pushing government bond yields higher.” “Eventually they may take aim at other countries – even Japan and the United States — where fiscal policy is on an unsustainable path,” he wrote. Read more »
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