Jefferies set aside $870 million in the first six months of its fiscal year, enough to pay its 3,809 employees an average of $228,407. Goldman Sachs set aside $225,789 for each of its 32,300 workers. Average pay for the 26,553 people in JPMorgan’s investment bank was $184,989, or at least 18 percent less than Jefferies’s and Goldman Sachs’s reported figures. It was 10 percent less than both in fiscal 2011…Goldman Sachs, run by Chief Executive Officer Lloyd C. Blankfein, 57, includes consultants and temporary staff when reporting headcount. Jefferies, which has been luring talent from larger rivals to expand in the wake of 2008’s credit crisis, tallies only full-time workers in its disclosures. Jefferies’s reported headcount would expand by 10 percent to 15 percent if the firm included temporary workers, said a person with direct knowledge of the figures who requested anonymity because the information isn’t public. While that would place the firm’s average pay per employee below Goldman Sachs’s, it still exceeds JPMorgan’s and Morgan Stanley’s. [Bloomberg]
Discolored tap water afflicted Goldman’s Lower Manhattan headquarters in July. The annoyance, familiar to anyone who has spent time in New York City, caused some hand-wringing (if not hand-washing) among the firm’s employees, for whom 200 West Street is usually a sanctuary of comfort. Water used for coffee and ice took on a yellowish color, and theories percolated among the staff as to what might be behind it. The construction at the World Trade Center site down the street? The fact that the building, which opened in October 2009, was still relatively new? Something else entirely? [...] The cafeteria, located on the 11th floor, began serving free coffee, apparently using an alternative water source. Service workers made the rounds, stocking the firm’s pantries with water bottles. But not everyone was satisfied. “People were hoarding water,” said one employee, who asked not to be identified because she was not authorized to speak publicly about the matter. “People would take two, three bottles of water at a time rather than just take one.” [...] “We took these precautions out of the utmost of caution,” David Wells, a Goldman Sachs spokesman, said in a statement, “but tests of the water showed there wasn’t a problem with the quality.” [Dealbook]
Banks Prove That They Are Not Too Big To Fail By Saying “We Can Fail” On A Piece Of Paper, Moving OnBy Matt Levine
One way you could spend this slow week is reading the “living wills” submitted by a bunch of banks telling regulators how to wind them up if they go under. Don’t, though: they’re about the most boring and least informative things imaginable and I am angry that I read them.* Here for instance is how JPMorgan would wind itself up if left to its own devices**:
(1) It would just file for bankruptcy and stiff its non-deposit creditors (at the holding company and then, if necessary, at the bank).
(2) If after stiffing its non-deposit creditors it didn’t have enough money to pay its depositors it would sell its highly attractive businesses in a competitive sale to willing buyers who would pay top dollar.
This seems wrong, no? And not just in the sense of “in my opinion that would be sort of difficult, what with people freaking out about JPMorgan going bankrupt and its highly attractive businesses having landing it in, um, bankruptcy.” It’s wrong in the sense that it’s the opposite of having a plan for dealing with banks being “too big to fail”: it’s premised on an assumption that the bank is not too big to fail. If JPMorgan runs into trouble that it can’t get out of without taxpayer support, it’ll just file for bankruptcy like anybody else. Depositors will be repaid (if they’re under FDIC limits); non-depositor creditors will be screwed just like they would be on a failure of Second Community Bank of Kenosha. Read more »
Goldman Sachs Employees Worried About Wives’ Inability To ‘Get’ Family Guy, Having Body Parts Put In Vise Grips, According To Reporter Who Stood In The Middle Of A Bar Near Goldman And Wrote Down Things People SaidBy Bess Levin
It was 5:01 p.m. The Blue Smoke bar was humming. Outside was hammering rain. The stock market had closed up smartly. Conversation strayed: “So I’m off to Sydney tomorrow. Then Hong Kong.” “You doing anything tonight? Tomorrow night?” “My wife was really annoying yesterday. She just doesn’t get ‘Family Guy.’” A suited man was telling a colleague, “I either get flowers for Janet or she’ll put my head in a vise.” [NYT]
The bad news is that Goldman Sachs, Deutsche Bank, UBS, and others have been making cuts and are expected to continue to do so. The good news is that not everybody is upset about it. Read more »
And so he’s not paying them on principle, the principle being I suppose “don’t fuck with Carl Icahn”:
Carl Icahn says he isn’t paying a bill from Goldman Sachs Group Inc., on principle. … “These guys were hired to keep me from buying the company at $30 and they failed,” Mr. Icahn said in an interview. “But they are now demanding $18 million for having done nothing.”
Goldman’s suit says the bank “fully performed all of its obligations.”
This is about Goldman’s lawsuit against Icahn-controlled CVR Energy, which has refused to pay Goldman’s bill, and both of these statements are obviously true! CVR and Goldman signed an engagement letter to the effect of (1) Goldman will hold CVR’s collective hand because it is scared of Carl Icahn and in exchange (2) CVR will pay Goldman 0.525% of the purchase price if someone buys it (and also some money if no one does*). Hands were held, so Goldman fulfilled its end of the bargain. Icahn does not think that that was worth eighteen million dollars but it wasn’t him trembling in the night as corporate raiders circled outside his door, so he wouldn’t would he? Read more »
Sell-side M&A work is mostly a pretty good and lucrative business model but it has a few flaws. Try to spot a key one here:
(1) you represent a target;
(2) you spend your days fighting tooth and nail with the buyer to try to make them pay more and give up optionality, and generally to get more of the benefits of the deal for the target than for the buyer;
(3) then the buyer acquires the target, fires all the directors and officers, changes the locks, and replaces the stationery;
(4) then you get paid.
the boy who would be king
Gary Cohn Is Very Happy Doing What He’s Doing i.e. Waiting For Someone To Pick Up The Hints He’s Been Dropping And Retire AlreadyBy Bess Levin
“Of course I would like to be CEO of Goldman Sachs, but I am very happy in the role and job I’m in now and I’ve a great job and a great opportunity in front of me. I am very happy doing what I am doing.” Read more »