“At first I thought it was a friend of mine pulling a prank. I thought it was Lloyd Blankfein,” Jamie Dimon said yesterday in Germany, re: the time Tom Brady called to cheer him up about JPMorgan’s $6.2 billion trading loss. He didn’t elaborate but it’s pretty obvious that the day Goldman was sued over Abacus, Dimon called over to GS pretending to be Aretha Franklin, telling Lloyd “no one’s got any R-E-S-P-E-C-T for clever investment products,” while months after JPMorgan bought Bear Stears, JD received a call from someone claiming to be “Jimmy Cayne” calling from the lobby with a sample of 90210 kush that he insisted Dimon had to come down and try but “A-SAP, ’cause Big J had to double park his truck.” [Bloomberg]
The following employees successfully made it through the “vigorous cross-ruffing” process and were inducted into the partnership this morning, after receiving a congratulatory call from Lloyd and an extra special visit by Gary, wherein the chosen few got to stick their grundles in his face. Read more »
Goldman Is Looking Forward To Making Less Money On Standardized Derivatives So It Can Make Much More Money On Non-Standardized DerivativesBy Matt Levine
How can you not love listening to Lloyd Blankfein? He spoke at this Merrill conference this morning and here are the slides, whatever; he is not a PowerPoint presenter, he is a philosopher. Let’s talk Philosophy of Lloyd.1
Lloyd and I share a number of passions, I assert without evidence, but a quirky one is that we both enjoy idly speculating about conservation laws in finance. In the Q&A Lloyd was asked about the clearing of derivatives and their movement to central counterparties, in which instead of banks trading opaque over-the-counter products with each other and their clients directly, taking client and fellow-bank counterparty risks, derivatives will increasingly trade in standardized cleared form with public pricing and central clearinghouse credit risk. Lloyd began by hypothesizing a “physical law of conservation of risk,” noting that “the things you do to reduce the risk of a 20-year-storm” – like reducing credit exposure to a bunch of different shaky counterparties in derivatives markets – “might make worse the risk of a 50-year storm,” like the credit exposure to one central counterparty whose failure could bring everyone down. I’m with you Lloyd: endorsed; narrow the distribution and fatten the tails etc.
The other concern about the move to clearing is that lots of people expect standardization and clearing will reduce the spreads that banks can charge on cleared things (mostly interest-rate swaps, some miscellany). Coincidentally a while back I speculated about a sort of law of conservation of abstraction, in which the abstract fantasies of our global financial system are built on the mucky underpinnings of a basement at DTCC full of damp stock certificates. That was … that was dumb, I don’t know what I was thinking.2 It’s obviously false. It’s the other way around actually: the more the inputs of the financial services industry abstract away from human activity, the more the outputs can move even higher up the abstraction chain. You see this with DTCC itself, which was seeking efficiency by dematerializing stock certificates even before a hurricane did that job for it, or in that Journal article last week about how Belgium is dematerializing its stock certificates and everyone’s all sad about it but the march of progress waits for no paper-hoarding Belgian.
You can see it especially Lloyd’s take on whether increased clearing of interest-rate swaps, etc., will help or hurt Goldman Sachs’s business. Read more »
Amateur Hour At West Side YMCA Prevented Lloyd Blankfein From Exercising His Civic Duty This MorningBy Bess Levin
Already exhausted from a massive cleanup and nightmarish commutes to work, thousands of U.S. voters in storm-struck New York and New Jersey encountered confusion and long lines as they tried to cast ballots in a cliffhanger presidential election…Voting at the YMCA on West 63rd Street in Manhattan was delayed because election officials could not find the ballot cards and scanners were not working properly. Among those arriving to vote there was Lloyd Blankfein, the chief executive of investment banking powerhouse Goldman Sachs. He left before voting there began. [Reuters]
Speaking on CNBC, Blankfein said he hasn’t read Smith’s Book, “Why I Left Goldman Sachs: A Wall Street Story,” which hit bookstores on Monday. He noted some reviewers said it wasn’t worth the hour and a half it would take to read. [Deal Journal]
Bloomberg: Not One Bank CEO Can Fill Jamie Dimon’s Shoes, Especially Not That Guy From Australia Who Doesn’t Own An IronBy Bess Levin
Earlier today, Bloomberg ran a lengthy piece about the latest crisis on Wall Street: a lack of Jamie Dimon. Specifically, a lack of Jamie Dimon telling meddlesome regulators, anti-industry populists, know-nothing Congressmen, and hypocrite bastard newspapers where they can go and what they can suck. True, it’s not as though he’s gone anywhere, and he’s still reminding people “it’s a free fucking country” but “juggling multiple investigations and a $5.8 billion trading loss on wrong-way bets on credit derivatives” has left his hands a little tied and, some believe, cost him his once untouchable “stature” in the industry.
And while one should never simply offer problems without solutions, Bloomberg isn’t gonna sugarcoat this one: when it comes to “any kind of credible statesmen” to step in for JD, Wall Street is shit out of luck and not just because no one besides Lloyd came close in sales of their respective Bankers At Work And Play pin-up calendars. Among current CEO’s, Lloyd Blankfein, Brian Moynihan and Vikram Pandit are deemed too busy “fixing their own firms or repairing their reputations,” while Wells Fargo chief John Stumpf, though respected among his peers, is ruled out due to geography (“Part of Jamie’s fitting into that role was his natural brashness as a Wall Streeter and New Yorker, and that is not John”).