Opening Bell

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.”

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88 Responses to “Opening Bell: 03.14.12”

  1. NYSE says:

    Taking this opening bell thing seriously aren't you?

  2. Guy with A.D.D. says:

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

    Shitty bonus compared to years past

  3. Guesty says:

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

    • guestosaurus says:

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

  4. urbanity says:

    Time to polish up my resume.

  5. Irving Cho says:

    Big deal, I won the silver.

  6. Sleeper says:

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

    I too enjoy getting my skull dugged.

    – L. Tilton

  7. Killing it Quant says:

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

  8. Guest says:

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

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

  9. bob says:

    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!

  10. Scrappy Doo says:

    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".

  11. Guest says:

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

  12. Guest says:

    Naaaah nah neh naaaaah nah

    -LvP

  13. Guest says:

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

  14. GS MD says:

    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,
    Spin

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

  15. Just Saying says:

    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"

  16. A Guest says:

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

  17. Boris says:

    In Soviet Russia, former employer fuck you over.

    – Soviet Russia Guy Redux

  18. Guest says:

    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.

  19. Guest says:

    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…

  20. Texashedge says:

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

    -Greg Smith

  21. Guest says:

    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."

  22. Beaker says:

    meep-meep….

    "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."
    http://blogs.wsj.com/deals/2012/03/14/goldman-rej

  23. Anonymous says:

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

    -Statler & Waldorf

  24. PermaGuestII says:

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

    This is a surprise?

  25. Everybody says:

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

  26. Very manly muppet says:

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

    [youtube -WWWTW1P8rQ http://www.youtube.com/watch?v=-WWWTW1P8rQ youtube]

  27. John says:

    GS banker resigns on The New York Times.

    UBS banker => The Butte Miner

  28. Mexi_Cant says:

    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?

  29. Guest says:

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

  30. AnnoyedLloyd says:

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

    • Billboard Man says:

      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.

  31. Sara Ackerman says:

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

    -Occupy OWS NYU Protester

  32. WtVE says:

    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.

  33. To ye in denial says:

    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!

  34. juniormistmaker says:

    uhhhh… yup… those all check out.

    I love coffee too, it's delicious.

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