–Thursday is Steve Schwarzman’s birthday. He claims he doesn’t want to do anything big, just a few close friends over to the manse, and if it turns be mostly couples, perhaps they’ll put some keys in a bowl, but nothing too crazy. He’s also supposedly telling people “no gifts”; this is a trap. You know he’s full of it and if you don’t READ HIS MIND and tally ho on over to Brookstone and snatch up one of those fancy $200 ass-hair trimmers he’s been eyeing for months (sources say Crab Hands was just relating the other day how he needs to ‘deforest the Schwarzwald’) and hand deliver it to l’office, along with the perfectly worded card, you’ll be looking at the business end of a hissy fit. –The Fox Business commercial. Remember? We found out that it only costs $250-$900 to buy a 30-second spot on FBN, depending on when it airs, and delineated tasks to the group. I repeat: You: Make a video and send it to us. We: Pick the best and our publisher will send it to Fox’s ad sales team. They: Either a) air it, and earn you a piece of quasi-immortality along such leading FBN lights as Fat Boy Cavuto; or b) shitcan it, and we’ll reprint a transcript and audio clip of how Fox, who would blow a goat for a few extra shekels, all of a sudden got all ‘integrity’ on us. I love the idea of sending the ValueStockTips guy, and it may very well come to that but seriously, show me what you can do. –Goldman Sachs is still firing people. So sayeth:
A friend and associate in equity derivatives got let go from GS this morning. He’s on his way to Maiden Lane to get his severance package. The reason? “Re-organization”
The source said the last thing he saw was a few schmattas throwing the guy in a car with Eddie Dane, who told him, “Everyone’s so goddamn smart. Well, we’ll go to Maiden Lane. And we’ll see who’s smart.”
Bear Stearns has more than $1 billion of short positions on subprime, up $400 million from the end of November, Bloomberg reports. Of course, since Bear Stearns got the subprime trade so wildly wrong last year, people are already wondering if this might be a signal that it is time to go long subrime.
Over at The Big Picture, Barry Ritzholz writes, “While I do not expect us to be done with the subprime slime yet, I do get a ‘Is this a bottom indicator?’ sense from Bear on this.”
JPMorgan Chase, which emerged relatively unscathed from the credit market debacle, is apparently taking the opposite position. Yesterday Jamie Dimon was reported to have said that the bank plans to expand its role in the subprime mortgage business. Goldman is also rumored to have reversed it’s position on subprime, taking a net long position. Bear Stearns Is `Short’ Subprime Mortgages $1 Billion [Bloomberg]
We’ve gotten to the bottom of the rumors we were following up on this morning about the rumored layoffs at Goldman Sachs. It turns out our skepticism was justified. There have not been across the board cuts at Goldman, and certainly not the type of layoffs we’ve seen at places like Citigroup and Bank of America.
But people are weeping into their keyboards, and a spat of “this is my last day at the firm” emails have been flying through 85 Broad Street today. This is the result of Goldman’s recently completed annual review process in which the people who come out in the bottom 5% are given a stern talking to and often leave the firm. Those in the dead pool have just been given notice—thus the resulting heartbreak, tears, rage and strangely dispassionate emails.
We hear the hideously unthinkable– layoffs at Goldman– are happening today. We have no other information*, other than that “the guy sitting next to me was crying.” Until someone coughs up something interesting, we’ll be watching Jiminy Glick clips (February is Jiminy Glick Month). We will begin with the following:
So who is on this list of 14 companies under investigation by the FBI for their involvement in the subprime mortgage crisis? The FBI apparently intends to keep us in suspense because they won’t give details. All we know is that they are looking into “allegations of fraud at various stages of the mortgage process, from companies that bundled the loans into securities to the banks that ended up holding them.”
So let’s recklessly speculate. Two companies that are sure to be on the list are Bear Stearns—which is already under investigation by federal prosecutors and the SEC—and Countrywide, which is both the biggest home loan lender and also facing an SEC inquiry. Goldman Sachs is very likely on the list. It was accused on the pages of the Sunday New York Times of misleading clients by packaging CDOs while shorting the mortgage market. We know that at least one Senator read the article and has been making a stink, and we know that federal investigators often get their leads by reading the paper. What’s more, Goldman Sachs has said that it is cooperating with an unnamed government agency.
Morgan Stanley has also admitted to cooperating with unnamed government authorities. At first, everyone assumed this was the SEC. But why wouldn’t they come out and say that? More likely they declined to name the agency out of fear that saying they were cooperating with the FBI would tar them with serious criminality—rather than the everyday Wall Street shenanigans implied by an SEC investigation.
So that gives us four good leads. Who else is a cylon on the list? No doubt some additional mortgage companies and some home builders. Maybe the ratings agencies are also. Leave your guesses in the comments section below. FBI Launches Subprime Probe [Wall Street Journal]
According to John Mack’s assistant (I kid, of course, though the tip was anonymous so it’s a fifty-fifty chance it could’ve come from her), Morgan Stanley’s population restructuring project will affect “more than just [the rumored] 1,000 brokers,” with cuts occurring in all departments but most heavily in IBD, and impacting 10-15% of total employees. But layoffs, these things happen all the time, and I don’t want to say I’m not beside myself with this news, but I’m not losing any sleep over it. Know what I am losing sleep over? Know what’s seriously cutting into my mid-morning nap schedule? Weighing on my mind? Distracting me from my Mark Haines fantasies? Infringing on my ability to stare off into space? This news (smut, rather) about Goldman Sachs—GOLDMAN SACHS—being forced into this pedestrian layoffs business. Cutting one person—VP, associate, analyst, trader, CEO, secretary, janitor—from Goldman Sachs is too many; according to Reuters, GS will be cutting a whopping 5 percent of its global workforce. I would like to know where the hell God, Goldman Sach’s co-pilot, is during all of this. What he could possibly be doing that’s more important than protecting his children. The only plausible explanation that I can come up with is that he was busy ghost writing this. If that happens to be the case, cool. It was worth it and “Who knows how many men unwittingly dropped their pants under the government’s watchful eye”? That was inspired my friend. Otherwise, we have a problem. Wall Street, even Goldman, faces ’08 slowdown [Reuters] What Happens in Men’s Room, Stays in Men’s Room [Bloomberg]