As we pointed out the other day, a rift has developed on Wall Street over whether access to funds from the Federal Reserve is worth the price of increased regulation. Lehman Brothers is reportedly willing to accept the regulation while Goldman Sachs is said to oppose it, and is willing to give up access to the new Fed facility if necessary. Tim Carney, who writes for the Washington Examiner and is the brother of one of DealBreaker’s editors, takes a look at why the investment banks have split over the issue.
These companies’ financial situations give a hint. Goldman, in its most recent quarterly report, showed a positive gross profit, as it had for the years 2007 and 2006. Lehman, meanwhile, posted a $6.6 billion gross loss last quarter.
Goldman, like the whole financial sector, has plenty of headaches, but thanks in part to its correct bet on the housing slowdown and credit crunch, it is thriving compared with its competitors. Subsidized loans will help Goldman, but the weaker sisters in the industry need them more. Regulations may stabilize Goldman’s position, but they will keep Goldman from improving that position.
Deal or no deal? [Washington Examiner]
The $13.25 billion acquisition of Electronic Data Systems by Hewlett-Packard—the ninth largest tech deal ever, according to DealLogic—has moved the M&A league table standings, DealJournal Heidi Moore reports. Before the deal was announced, Goldman Sachs and Morgan Stanley led this year’s ranking from advising technology companies on mergers. But neither bank has a role in the H-P deal, pushing them down in the rankings
“Goldman ranked first with $14 billion of announced deals to its credit this year, and Morgan Stanley ranked second with $11 billion according to investment-banking research provider Dealogic,” Moore writes. “But now, Goldman is in third place, displaced by Lehman Brothers and J.P. Morgan. Lehman has jumped from fifth to first place with $17 billion of deals to its credit, while J.P. Morgan — which, just yesterday, languished in seventh place with only about $2.2 billion of tech deals to its credit — has vaulted to second place in the rankings from seventh place. Morgan Stanley has fallen to No. 5.”
Citigroup and Evercore Partners advised Electronic Data on the deal. J.P. Morgan Chase and Lehman Brothers advised Hewlett-Packard.
Hewlett-Packard: The Advisers [Deal Journal]
Other news media wait until the market closes before reporting on trader chatter and market rumors because they don’t think you are smart enough to handle the half-truths. We have more faith in our readers. So we bring it to you straight and without condescending censorship
Today the chatter is about Goldman Sachs. People say lots of things, but today they are saying that Goldman will announce a major stock buyback tonight after the market closes. They’re even putting a number on it: $8 billion. Of course, the people saying this are in no condition to know and last week they probably would have told you that Lehman Brothers would be worth $2 on Monday. (But a couple weeks before that they were right about Bear Stearns.) Make of it what you will.
A side note: it’s kind of nice to report on bullish rumors about an investment bank. When was the last this happened?
Goldman Sachs didn’t comment on this because they wouldn’t anyway so we didn’t call them.
Goldman Sachs, which announced this morning that it made $1.5 billion last quarter, has quietly been telling some employees to prepare for another round of layoffs. The job cuts are scheduled for mid-April, and will include some senior positions which have not been large cash generators, according to a person familiar with the matter. Goldman, which has weathered the storm of the credit crunch better than many competitors, has not had anywhere near the level of job cuts that rival firms, such as Lehman Brothers, have had.
Goldman Sachs was not asked to confirm this report.
Lloyd Craig Blankfein, people! Is the whole world going to shit? The following is absolutely outrageous. And I think we all know who’s to blame. (Starts with an ‘E,’ ends with a ‘liot Spitzer fucked a hooker and this is the fallout.’)
To: All London GS
Subject: Policy Changes – Evening Meals and Taxis
Following a firmwide review of our policy on evening meals and taxis,we have decided to implement the following changes, which will become effective today.
From today, the Petershill cafeteria will open in the evening from 7 pm to 9 pm (6.30 pm to 8 pm on Fridays) in line with the current opening hours at River Court. On completion of the current refurbishment work in early April, the Christchurch Court cafeteria will also open at these times.
Given these extended hours of cafeteria operation and the significant incremental cost of dining@mydesk, the dining@mydesk service will only be available after 10 pm (9 pm on Friday). Staff in Christchurch Court can continue to use dining@mydesk between 7.30 pm and 9 pm until the Christchurch Court cafeteria has reopened. Cafeteria meals will be reimbursable (via T&E) from 7.30 pm onwards. The maximum reimbursable amount for cafeteria meals has been adjusted to £10, to reflect the cost of a full meal within the firm’s cafeterias. Cafeteria receipts will need to be retained in order to submit a T&E for reimbursement.
The evening rolling taxi rank will continue to be available on weekdays from 6 pm to midnight, but evening taxis home will now be paid for by the firm from 10 pm (rather than 9 pm at present).
Goldman Sachs Asset Management recently fired about twenty people from two teams managing Global Alpha and Global Equity Opportunities and, according to Charlton Heston, the victims were the analysts who “do all the actual work,” as opposed to names slightly higher on the roster who, beyond being involved in poor day-to-day decision making, do jack and cost a ton to employ. If you want to be all cynical you could chalk the canning methodology up to the groups (and GS at large and, you know, the entire Street) being boys clubs whose members have each others’ backs and who won’t let their brohamsters get fired for petty little things like shitty performances, and I guess if you’re looking at it like that, then, yeah, it seems kind of bad. But that’s because you’re looking at it all wrong– these firings actually cast GSAM in a positive light, because they underscore the division’s commitment, above all, and at all times, to lose as much money as possible. Getting rid of co-head Peter Kraus the other day doesn’t really seem in line with the aformentioned bottom line, so tut tut there, but we cross our fingers that his replacement will be paid more for less competence. I don’t think we need to tell you who’s in total agreement on this one:
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Tags: Layoffs, Mark Spilker, retirement, rumors
Here’s a fun one: at the end of January it was reported that Goldman would be cutting 5% of its global workforce, because (pick one) a. These bottoms weren’t living up to the Goldmany Goldman standard b. As it turns out, Goldman’s not better than everyone else (well, better than Citi but who isn’t?) c. Someone knocked over the printing press GS uses to make the money and with the new one on back order and the Kinkos employees on break, the firm was forced to take desperate measures.
Either way, 5 percent globally, not that big a D. Now some rumors going around the city’s biggest shuls seem to imply that things are worse than previously imagined. Apparently unexpected firings at 85 Broad today have people panicked that Goldman could layoff an overall 25 percent of its workforce.
Meanwhile, Peter Kraus, who took over as head of investment management in June 2001, just retired, according to sources familiar with the matter of making a firing look involuntary (We kid!…).
Remember Mark Spilker? He was the guy who cut down Kynikos founder Jim Chanos’s hedges in the Hamptons without asking first this summer. He was just added to Goldman’s management committee, the small coterie which runs the bank. That can’t be good.
Goldman, of course, had no comment (unless you consider the sound of someone laughing and crying at the same time a comment).
A friend o’ the fired fills us in:
“It’s more than just a hiring freeze – yesterday in IBD an MD, VP, and Associate were shown the door in Industrials and two Associates were canned in NR.”