Back in 2009, Goldman Sachs Chief Financial Officer David Viniar, whose face may not be as recognizable to you as that of Lloyd’s but whose voice you’ve likely found just as if not more soothing each time you hear it during the firm’s earnings calls, decided he was ready to move on after a three-plus decade long career with The Firm. Normally, that would have been just fine; people would have wished Viniar all the best as he happily waved good-bye to all his colleagues and friends from the gondola lift made of fluffy clouds and money that transports all Goldman Sachs executives to retirement.
Unfortunately for DV, however, it was around the time that he started to think about leaving that Goldman hit some unfortunate rough patches that included “a civil fraud suit by the Securities and Exchange Commission over marketing of mortgage-related securities, a federal criminal probe on the same matter, and a civil suit brought by a hedge fund that bought a Goldman CDO.” And while other higher-ups– no names: Jon Winkelried– would have thought nothing of abandoning Lloyd in his time of need or what kind of message it would have sent that a top official was calling it quits, David “Bones” Viniar is a little more loyal than that. Lot more loyal in fact (“He’s so loyal he’s only going to do anything when the timing is appropriate,” one person said at the time, adding that “David will do whatever the firm asks of him”) and so he stayed. Stayed by Lloyd’s side during his darkest hour. Stayed when the Goldman needed him most. And although some might have hoped he’d forget about wanting to leave; that he could be tricked into staying “just one more year” and another and another and another after that; that that good-bye he put on hold would stay on hold forever; that, if all else failed, Gary Cohn could physically prevent DV from leaving by putting him in a sleeper hold with his legs…that good-bye has come. Read more »
You can’t possibly care about GS earnings can you? “Beat Diminished Expectations” is an elegant summary. FICC looks anemic relative to JPM and C but as Glenn Schorr of Nomura pointed out on the call some of what those guys call FICC Goldman calls “Investing & Lending” and an important principle of selling financial services generally is that non-comparability helps you so good work Viniar!
Good work Viniar generally; my favorite bit was when Schorr asked about all the recent partner departures and Viniar said basically that they were making up for lost time what with all the partner non-departures over the last four years, when it was a “tough economic environment, a tough reputational environment,” and partners – well they were so “completely loyal” that they just couldn’t leave GS in the lurch at trying times like those. This tickled me because, boy, don’t you wish you were a Goldman partner? In my line of work, when nobody was hiring and if they were hiring they weren’t hiring Goldman alums because Goldman was a vampire squid sucking the stuffing out of muppets, staying at Goldman until conditions improved was just simple pragmatism and nothing to be proud of: if you can’t get a job elsewhere, and you need a job, it stands to reason that you keep the job you’ve got. But once you’re making ten bucks a year the same behavior is the height of loyalty: since you don’t need a job anywhere, you show that you’re unbowed by the bad job environment and Goldman’s tarnished reputation by continuing to draw your partner paychecks. That seems right actually, and I promise you that I will grow many delightful moral qualities if you pay me $10 million a year. Read more »
People being the operative word here, as the statement “we’re going to look for other means for efficiency” most certainly suggests plants may once again find themselves on the chopping block. Read more »
Like I mentioned earlier, the David Viniar show this morning is a good time in its (relatively) quiet way. If, like me, you’ve drunk the GS we-understand-risk Kool-Aid, you’ll particularly enjoy Viniar’s take on capital requirements, which is – and I say this as a compliment – pretty cynical. Now, one thing that you might have in your arsenal of thoughts about bank capital is something along the lines of “capital requirements are a way of forcing bank managers to confront the risks of their positions and fund those positions in a loss-absorbing way to protect their creditors and the financial system more broadly.” Your faith in that position should I think be a little shaken by some of the Viniar Q&A. For instance:
Roger A. Freeman – Barclays Capital: [H]ow are you charging the desks for capital at this point? Is it on a Basel I basis or Basel III or some combination?
David A. Viniar: … As far as how we’re charging the desks, that’s a little bit of a complicated question. And we’re working through that now, and it — there’s no one-size-fits-all yet. And we have to be careful. As you know, Basel III does not kick in for quite a while, and quite a bit of what we do is very short dated. And so we don’t want to charge desks on a Basel III basis, have them turn down profitable opportunities that would be long gone from our balance sheet long before Basel III ever kicks in. So we’re really taking into consideration the tenor of what we do and trying to figure out what capital regime we’re going to be under. And it’s still — I would say, we’re going through a transition process here.
On the one hand, totally unsurprising and unobjectionable. On the other hand note the pragmatism: if and when our regulators are going to charge us for capital under the (generally higher) Basel III rules, we will charge desks for capital based on those rules. If not, not. The rules are the rules and the transition to new rules will be made in accordance with the rules. Only. If you thought “well, Basel III will improve the health and safety of banks by steering them away from the riskiest worst scariest products” – guess what, Goldman disagrees. They’ll manage capital to whatever regime is in place, as a matter of complying with regulation, but the capital rules appear to have no effect whatsoever on how they actually think about the risks of their assets, trades and businesses.
Generally speaking, when people gather around to play a parlor game of guessing who will replace whom on Wall Street, they a) are discussing Chief Executive Officers and b) choosing one of several names for their pick of successor. Not today. Because today we speak of David Viniar, Goldman Sachs’ Chief Financial Officer since 1999. According to Bloomberg, DV “may not be replaceable,” period. Logic dictates that that should be the end of the discussion. In the event Viniar decides not to work for Goldman in perpetuity, however, contingency plans must be made. As such, a few names of potential successors have been thrown out (Controller and Chief Accounting Officer Sarah Smith, Treasurer Elizabeth “Liz” Beshel) and while they sound like okay candidates, are simply not enough. Because in this particular case, we need an army to replace one man.
The longest-serving chief financial officer of any major Wall Street firm may find his multiple roles distributed among two or even three deputies when he eventually steps down, according to two people with knowledge of the firm’s internal deliberations…Some executives at the firm are skeptical that any single successor would be as adept as Viniar in handling all those functions, the people familiar with the situation said.
Has the gravity of the situation not yet penetrated? Then let us lay some truth on your ass. Read more »
Goldman Sachs was “buying more illiquid assets than we probably should have,” Viniar, 55, said today at a conference in Miami hosted by Credit Suisse Group AG, his eighth consecutive appearance at the annual event. “It was a good lesson learned.” [Bloomberg]
Perhaps some of you remember Jon Winkelried? The former Goldman Sachs co-president is persona non grata at the firm but for the purposes of context, a quick refresh: Winkelried was the good for nothing prick who abandoned Lloyd Blankfein when the CEO needed him most, and when it would look most bad for the company to have a high level departure (circa the shit hitting the fan era). A traitorous shrew, really, who let deaf ears fall on Blankfein’s pleas to stay, and who traded it all in for a bunch of barnyard animals.
Anywho, Goldman ended up getting on just fine with out he whose name shall not be mentioned, got on great in fact, but his actions did leave a lasting mark on Blankfein, namely that he lost the ability to open up and trust high level execs and that his previously dormant abandonment issues flared up like nobody’s business. So when there was talk of Goldman CFO David “Bones” Viniar retiring, Lloyd naturally panicked. But apparently it was for naught. Bones would never do that to his li’l fella. Read more »