Goldman Sachs Doesn't See Anything In The Volcker Rule That Prevents The Bank From Making Principal Investments With Its Own Money

Author:
Publish date:
Updated on

The rest of the market thought otherwise but Goldman has another interpretation.

Goldman will continue making principal investments with the firm’s own money because executives don’t think the so-called Volcker rule prevents the practice, a Bank of America Corp. analyst said. The analyst, Guy Moszkowski, published a note to investors today after meeting last week with four Goldman Sachs executives in Hong Kong. New York-based Goldman Sachs doesn’t think U.S. legislation passed last year that bans proprietary trading and limits holdings in hedge funds and private-equity funds precludes buying stakes in companies and other assets, Moszkowski wrote.

“The market interpretation of Volcker rules is that this will be off-limits ahead, but GS believes that many such investments will remain permissible, and will be closing on a ‘meaningful’ one in China shortly,” Moszkowski’s note said.

The investment is in Taikang Life Insurance, with a 12.02 percent stake. Thank you, Pedro!

Goldman Sachs Still Planning Principal Investments [Bloomberg]

Related

The Volcker Rule Will Come Too Late For Kaufman Bros.

If you're a more or less regular consumer of efficient markets hypothesis Kool-Aid then a fun activity is to handicap the probability of various public policy things based on market reaction.* So for instance Obama's budget is going to reduce the tax deductibility of munis! And the muni market didn't care! So, no, Obama is not going to reduce the tax deductibility of munis. You heard it here first, or last, or whatever. (Exercise for the reader: is Obama going to raise the tax rate on dividends?) Since today seems to be Volcker Day hangover it's worth pondering this: