Opening Bell: 03.14.12

Why I Am Leaving Goldman Sachs, by Greg Smith (NYT)
It makes me ill how callously people talk about ripping their clients off. Over the last 12 months I have seen five different managing directors refer to their own clients as “muppets,” sometimes over internal e-mail. Even after the S.E.C., Fabulous Fab, Abacus, God’s work, Carl Levin, Vampire Squids? No humility? I mean, come on. Integrity? It is eroding. I don’t know of any illegal behavior, but will people push the envelope and pitch lucrative and complicated products to clients even if they are not the simplest investments or the ones most directly aligned with the client’s goals? Absolutely. Every day, in fact.

Stress Tests Buoy US Banks (WSJ)
Stock prices reacted positively amid a spate of other upbeat economic news, including a robust retail-sales report and optimistic comments by Fed officials on the overall state of the U.S. economy. The Dow Jones Industrial Average ended the day up 1.7%, its highest close since December 2007. Asian markets opened trading on Wednesday higher, with Tokyo up 1.9%. The Fed’s stress tests were designed to see whether banks would have enough capital on hand to keep lending even if another deep economic slump or financial crisis were to strike. It’s the third round of stress tests: The first took place in 2009, in the immediate aftermath of the financial crisis. At that time, banks fared much more poorly.

JPMorgan Dividend Surprises Investors, Irks Fed (Bloomberg)
The bank’s disclosure prompted other lenders, including Wells Fargo & Co. (WFC), U.S. Bancorp and PNC Financial Services Group Inc. (PNC), to accelerate the disclosure of their dividend plans. It also irritated some staff at the Fed, which had planned to release the test results ahead of the industry, said one person familiar with the central bank’s operations who declined to be identified because the discussions were private.

Pandit Repeats Moynihan’s Misstep as Citigroup Request Backfires (Bloomberg)
Citigroup was the biggest U.S. lender yesterday to fail the regulator’s exam of capital levels in a hypothetical economic downturn because of the New York-based firm’s plan to boost dividends or stock repurchases. Bank of America, which had its payout request rejected last year, passed the 2012 test after Moynihan decided to keep his company’s dividend at 1 cent. “Pandit misread the situation badly, you just don’t ask for something if you don’t know you can get it,” said Greg Donaldson, chairman of Evansville, Indiana-based Donaldson Capital Management LLC, which oversees $540 million including Bank of America shares. “Moynihan was chastened by what happened last year, he absolutely wasn’t going to take any chances of getting rebuffed again.”

Stress Tests Results Can’t Be Trusted, Says Strategist (CNBC)
“I think a lot of banks are still overstating assets and they haven’t recognized problem loans, to the extent that they should have done and it’s very difficult to trust numbers,” Peter Elston, Asia Strategist at Aberdeen Asset Management told CNBC on Wednesday.

Merkel Says Europe Is ‘Good Way’ Up Mountain, Not Over Yet (Bloomberg)
“We’ve come a good way along the mountain path, but we’re not completely over the mountain,” Merkel told reporters in Rome late yesterday after talks with Italian Prime Minister Mario Monti. “I suspect that in the next few years there will continue to be new mountains — there won’t be a celebratory event in which we say we’re over the mountain and now we can sit among the trees and say that we’ve done it.”

Eurogroup Approves Second Greek Bailout (WSJ)
The euro-zone countries Wednesday finally signed off on Greece’s second bailout program, ending a protracted and dramatic negotiating process that started last July. The hope is that the €130 billion ($170.1 billion) package—funded mostly by euro-zone countries and the International Monetary Fund—will be enough to keep Greece funded until 2014-2015. But talk of a third Greek bailout has already started with the ink still wet on the second one, especially following a report by European Union experts highlighting the risks to structural-reform implementation and predicting “at best stagnation” for 2013. Greece has been in a recession for five consecutive years.

Ex-Lehman Executive Jack’s $35 Million Estate Faces Tax Auction (BW)
The $35 million estate of Bradley H. Jack, the former Lehman Brothers Holdings Inc. (LEHMQ) managing director who was arrested twice for allegedly forging drug prescriptions, may be sold at a municipal auction after he failed to pay property taxes since July. Jack owes $271,923 on his 20-acre (8-hectare), waterfront compound in Fairfield, Connecticut, according to town tax collector Stanley Gorzelany. It’s the town’s biggest overdue tax bill on a residence.

A Public Exit From Goldman Sachs Hits at a Wounded Wall Street (NYT)
To be sure, longtime bankers say it is not like short-term greed was absent in the past. It has been around since traders gathered under a buttonwood tree and founded the New York Stock Exchange in 1792. But the astounding size of Wall Street’s biggest firms — and the fortunes to be made — have altered the calculus. “I think there was plenty of skullduggery going on,” said Jerome Kohlberg Jr., who worked at Bear Stearns for 21 years before leaving to found Kohlberg Kravis Roberts in 1976 with Henry R. Kravis and George R. Roberts. Still, the trend has accelerated in recent years, according to Mr. Kohlberg. “When I first started on Wall Street, it was a small group and everyone knew everyone else,” he said. “If you stepped out of line, people would not do business with you.”

88 comments (hidden to protect delicate sensibilities)
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Comments (88)

  1. Posted by NYSE | March 14, 2012 at 9:52 AM

    Taking this opening bell thing seriously aren't you?

  2. Posted by Guy with A.D.D. | March 14, 2012 at 9:54 AM

    Why I am leaving Goldman Sachs (The abridged version):

    Shitty bonus compared to years past

  3. Posted by Guesty | March 14, 2012 at 9:55 AM

    Winning a bronze medal for table tennis at the Jewish Olympics is the NKI.

  4. Posted by Oranje, CFA | March 14, 2012 at 9:56 AM

    Sounds like you'd fit right in.

  5. Posted by urbanity | March 14, 2012 at 9:59 AM

    Time to polish up my resume.

  6. Posted by Student Jason | March 14, 2012 at 10:00 AM

    Sounds like you're my teacher.

  7. Posted by Guest | March 14, 2012 at 10:01 AM

    So GS is hiring?!

  8. Posted by Irving Cho | March 14, 2012 at 10:04 AM

    Big deal, I won the silver.

  9. Posted by Sleeper | March 14, 2012 at 10:05 AM

    "I think there was plenty of skullduggery going on".

    I too enjoy getting my skull dugged.

    – L. Tilton

  10. Posted by Killing it Quant | March 14, 2012 at 10:06 AM

    Making leaving GS on good terms to be a blogger appear to be the NKI is not in fact the NKI

  11. Posted by Guest | March 14, 2012 at 10:07 AM

    Why I am leaving Goldman Sachs…. to join the circus

    (because I'll never work in this town again after the Op-Ed stunt}

  12. Posted by bob | March 14, 2012 at 10:07 AM

    this guy so obviously got f'd on his bonus this year. what a generic and vague op-ed. "i work for a business that is first and foremost concerned with making money" – cry me a river guy!

  13. Posted by Scrappy Doo | March 14, 2012 at 10:09 AM

    GS only cares about it's own p&L and uses clients like Kleenex? Bah. In other news water is wet, triathaloners are douches, and Bess is smokin' hot. Way to grow a conscience when you are fully strapped full of cash. If they are ever the best bid – you might want to rethink selling it. And yo – you morons in foreign governments reading this? Get an effing grip – you can take your pain now or some bank that shall not be named can shove it up multiple orifi later after you pay them – your call. Just ask Matt. He will give you 4k words and 20 charts on how "it was wasn't me, it was you, baby".

  14. Posted by Guest | March 14, 2012 at 10:09 AM

    Whoa. don't you see it? "Greg Smith" is a coded anagram for "Matt Levine." No wonder he's disappeared for a few days…

  15. Posted by Guest | March 14, 2012 at 10:11 AM

    Naaaah nah neh naaaaah nah


  16. Posted by Guest | March 14, 2012 at 10:13 AM

    Greg Smith's finest moment was going to the Jewish Olympics? Is that a nom de plume then?

  17. Posted by GS MD | March 14, 2012 at 10:14 AM

    To My Clients,

    Today's OpEd piece by Greg Smith unfairly characterized my view of you, particularly the negative light in which he portrayed my referring to you as "muppets." Whilst Greg and others may wish you take this reference as a slight, or belittlement, I wish for you to understand that I use the word "muppet," with the greatest of respect. To me, being a "muppet," is one of the many defining characteristics of both class and wealth for our time. From our adventures in Treasure Island, to our trials and subsequent lessons in Christmas Carol. And although our recent foray into Space was met with some resistance, please rest assured, we at GS are working hard to make sure your interests as puppets remain as safe on Wall Street as they are on Sesame Street.

    Yours Faithfully,

    P.S. You will be receiving a billing for the aforementioned clarification of the word "muppet"

  18. Posted by Just Saying | March 14, 2012 at 10:14 AM

    Excerpt from the guy leaving GS piece

    "When I was a first-year analyst I didn’t know where the bathroom was, or how to tie my shoelaces"

  19. Posted by Guest | March 14, 2012 at 10:15 AM

    Looks like somebody drank their Carnation Instant Douche this morning

  20. Posted by Bwaaaa | March 14, 2012 at 10:16 AM
  21. Posted by A Guest | March 14, 2012 at 10:18 AM

    I missed Matt's resignation letter. Where is that published?

  22. Posted by Boris | March 14, 2012 at 10:19 AM

    In Soviet Russia, former employer fuck you over.

    – Soviet Russia Guy Redux

  23. Posted by Guest | March 14, 2012 at 10:23 AM

    I'm not sure this op-ed came from a former GS employee as it was relatively brief, and contained no hyperlinks or graphs. Other than that I can't disagree with the contents.

  24. Posted by Sam The Eagle | March 14, 2012 at 10:23 AM

    I call this piece "A Salute to All Nations, but Mostly America"

  25. Posted by Guest | March 14, 2012 at 10:25 AM

    So does this mean he#s donating his ill-gotten gains bonus to charity? No? I didn't think so. Move on. Nothing here to see…

  26. Posted by Guest | March 14, 2012 at 10:25 AM

    Maybe his mom was Jewish?

    –Guy who's a Gentile but a student of the Diaspora

  27. Posted by Texashedge | March 14, 2012 at 10:28 AM

    "Hey, I'm leaving Goldman Sachs. Here's my CV."

    -Greg Smith

  28. Posted by Guest | March 14, 2012 at 10:30 AM

    In Summary:

    "I was in charge of a bullshit product invented solely to drive revenue for the company, but got all sore when the facade of "doing right for the client" melted away and the reality that derivatives are a shell game for investment banks to pad the bottom line became evident.

    Also, I became insanely rich; so rich, in fact, that I can resign and never work again and express my soreness in a way that will be career limiting henceforth."

  29. Posted by Beaker | March 14, 2012 at 10:30 AM


    "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."

  30. Posted by Anonymous | March 14, 2012 at 10:30 AM

    We are stll waiting for our free toaster from Goldman Sach.

    -Statler & Waldorf

  31. Posted by PermaGuestII | March 14, 2012 at 10:34 AM

    They put a J. Aron metals trader in charge of GS and the culture went to shit and short-termism.

    This is a surprise?

  32. Posted by Everybody | March 14, 2012 at 10:34 AM

    Matt you absolutely have to write your reply to this dynamite.

  33. Posted by Very manly muppet | March 14, 2012 at 10:36 AM

    Am I a maaaannnnn? Or am I a muppet (am I a muppet)?

    [youtube -WWWTW1P8rQ youtube]

  34. Posted by John | March 14, 2012 at 10:41 AM

    GS banker resigns on The New York Times.

    UBS banker => The Butte Miner

  35. Posted by Mexi_Cant | March 14, 2012 at 10:44 AM

    How the hell did he get passed the 4th round interview, peeing on the leg of a managing director in IT if he didn't know where the bathroom was?

  36. Posted by guestosaurus | March 14, 2012 at 10:46 AM

    it must feel great to be kind-of-good-but-not-really at the one thing 1 billion chinese are really good at

  37. Posted by Guest | March 14, 2012 at 10:49 AM

    Somebody had a bit toooo much peyote this am

  38. Posted by Guest | March 14, 2012 at 10:49 AM

    The good news for Citi is that Vik stress-tested his bonus and it's all fine to be paid out.

  39. Posted by Mexi_Cant | March 14, 2012 at 10:54 AM

    I'm allowed to go to work high one special day a year, today is that day.

  40. Posted by AnnoyedLloyd | March 14, 2012 at 10:56 AM

    Another disgruntled ex-employee. Note to self: we need to get them to leave with their grunts intact.

  41. Posted by PermaGuestII | March 14, 2012 at 10:58 AM

    Danbury News-Times

    Page C9- next to the bridge scores.

  42. Posted by summer | March 14, 2012 at 10:58 AM

    it's all about the bucks kid, the rest is just conversation.

  43. Posted by Guest | March 14, 2012 at 10:58 AM

    I notice there weren't four pages of legal disclaimers attached to the bottom, either.

  44. Posted by Guest | March 14, 2012 at 11:00 AM

    I wanted to like it for the triathloners part.

  45. Posted by PollyPerkins | March 14, 2012 at 11:03 AM

    Actually, I think it's a code name for Zack Kouwe.

  46. Posted by juniormistmaker | March 14, 2012 at 11:18 AM

    If only LvP was still there. This would have been fantastic.

  47. Posted by Warren B | March 14, 2012 at 11:22 AM

    If you've been doing business with Goldman Sachs for 15 minutes and you don't know who the muppet is…..welll…you're the muppet.

  48. Posted by NowOnePerson | March 14, 2012 at 11:28 AM

    Pi Day? Pi Day is your day for working high? Who comes up with these rules?

  49. Posted by Lord Humongous | March 14, 2012 at 11:33 AM

    Does that mean he shat in his shoes every day?

  50. Posted by L. Tilton | March 14, 2012 at 11:34 AM

    Does that work ?

  51. Posted by Cut Me | March 14, 2012 at 11:36 AM

    Do you enjoy the feeling of sand beneath your feet?
    -Riyadh Bank HR

  52. Posted by Prick | March 14, 2012 at 11:37 AM

    It's code for you both suck and never post again.

  53. Posted by Sara Ackerman | March 14, 2012 at 11:40 AM

    I like this guy's moves, the op-ed page is always final refuge of the principled and justified.

    -Occupy OWS NYU Protester

  54. Posted by Guest | March 14, 2012 at 11:44 AM

    Maybe he'll Favre it and come out of retirement for this opportunity.

  55. Posted by WtVE | March 14, 2012 at 11:54 AM

    This just in, there are reports that former employee of Goldman Sachs, Greg Smith, has apparently demolished Goldman chair Lloyd Balnkfiens summer residence in the hamptons.

  56. Posted by TYIA | March 14, 2012 at 12:04 PM

    P.S. Please don't look up the phrase "mowing muppets." It's totally not what we meant. At all.

  57. Posted by Mot zam | March 14, 2012 at 12:06 PM

    have you examined your motives in writing this ?

  58. Posted by whowhawhen | March 14, 2012 at 12:06 PM

    meep, meep-meep

    – Beaker, UBS MD

  59. Posted by Guest | March 14, 2012 at 12:23 PM
  60. Posted by To ye in denial | March 14, 2012 at 12:34 PM

    I love how Wall Street rationalizes every attack on it :P

    Greg Smith: He's a sore loser who got a bad bonus

    Nicholas Nassim Taleb: One trade wonder, now lunatic

    OWS: Bunch of losers who can't get a job

    Ron Paul's supporters: refer OWS

    Volcker, Stiglitz: Who cares?

    Wake up and smell the coffee douchebags!

  61. Posted by L. tilton | March 14, 2012 at 1:12 PM

    Coffe douchebags and carnation instants too ?

    This is fantastic. I'm logging onto amazon right now.

  62. Posted by Billboard Man | March 14, 2012 at 2:03 PM

    Derivative, of course (of: "I could see that, if not actually disgruntled, he was far from being gruntled"), but I guess that's what we do.

  63. Posted by juniormistmaker | March 14, 2012 at 2:10 PM

    uhhhh… yup… those all check out.

    I love coffee too, it's delicious.

  64. Posted by Mexi_Cant | March 14, 2012 at 2:12 PM

    My father made the rules because he didn't want to use condoms exactly 9 months before Pi Day.

  65. Posted by b-chan | March 14, 2012 at 2:47 PM

    That's about it. He is throwing a hissy fit. Any mom with a 3 year old will be able to relate to this entitlement tantrum.

  66. Posted by Guest | March 14, 2012 at 4:00 PM

    Lighten up Francis

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    VP = ED in London you genius

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