If you’re a true believer in vulgar Volckerism – “banks shouldn’t be allowed to make bets with their own money” – then you have an inexhaustible source of things to get mad about, since the only thing banks do is make bets with their own money, for some values of “bets” and “own.” Bloomberg’s Max Abelson found one today, specifically that Goldman has a group that invests its own money in securities, and it is
a secretive Goldman Sachs group called Multi-Strategy Investing, or MSI. It wagers about $1 billion of the New York-based firm’s own funds on the stocks and bonds of companies, including a mortgage servicer and a cement producer, according to interviews with more than 20 people who worked for and with the group, some as recently as last year. The unit, headed by two 1999 Princeton University classmates, has no clients, the people said.
Multi-Strategy Investing happens to be part of a larger group called the Special Situations Group, which also invests the firm’s own money – as Abelson puts it:
That parent group, which uses the firm’s funds to profit from distressed and middle-market companies, has been a major profit center at the bank, sometimes the biggest, former executives told Bloomberg in 2011. Its holdings that year included debt of Melville, New York-based pizza chain Sbarro Inc.1
The phrase “uses the firm’s funds to profit from” is exquisite; Goldman would probably say “invests in and lends to.” Y’know, like a bank (or a merchant bank). Not that they’d disclaim profiting, but, yeah, investing in and lending to companies is a thing that Goldman does.2
Is this a scandal? The short answer is “naaah.” Who cares? What is the Volcker Rule for? Read more »
