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Lloyd Blankfein's Sunday Night Peptalk
Politico has released the Voice Mail that Lloyd's blasted to all employees on Sunday night. In it we read that Lloyd still thinks his firm has a reputation, let along one which must be defended. The most amusing part is where the CEO tells workers to "maintain the level of focus
on our clients" - we assume this means using Goldman's extensive idiot-rolodex, calling up the dumbest of the dumb money and using GS' "brand and reputation" in selling them whatever the most recent version of toxic crap that the smarter money du jour wants to short via Goldman and its second to none flow and prop desk.
“This is Lloyd on Sunday in New York. Following my message to you on
Friday, I wanted to update all of you and let you know that we have
been taking all appropriate steps to defend the firm and its
reputation. ... The extensive media coverage on the SEC’s complaint is
certainly uncomfortable, but given the anger directed at financial
services, not completely surprising. Still, it is important to put the
SEC’s action in context. The core of the SEC’s case is the allegation
that one employee misled two professional investors by failing to
disclose the role of another market participant in a transaction.
Importantly, we had assumed risk in the deal and we lost money, just
like the other two long investors. I will repeat what you have heard me
say many times in the past: Goldman Sachs has never condoned and would
never condone inappropriate activity by any of our people.
“On the contrary, we would be the first to condemn it and take
immediate and appropriate action. Our responsibility as a financial
intermediary requires it and our commitment to integrity and the firm’s
business principles demand it. ... In the meantime, be assured that our
global team, including the Board of Directors and the Management
Committee, is working diligently to address the complaint with the
facts. To that end, in the next few weeks, Goldman Sachs will have the
opportunity to appear before Congress and discuss our role and
participation in the mortgage market more broadly. We look forward to
discussing our strong record of prudent risk management. As you return
to work on Monday morning, I ask that you maintain the level of focus
on our clients that is at the heart of Goldman Sachs’ success over the
past 140 years. We have faced challenges before and our people have
always responded through their skills, talent and focus on our clients.
We will do that now, and in the process, re-affirm everything that
defines Goldman Sachs. Thank you.”
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It's not necessarily all dumb money. I suspect that GS is the protection-racket arm of the usa gubmint.
he's not just the Hair Club President
Hilarious...
Lloyd remember to powder the Cue ball before teevee appearances so you don't resemble a sweaty, shifty bankster... Cramer knows this...
"Importantly, we had assumed risk in the deal and we lost money, just like the other two long investors".
Why is losing money evidence that GS did nothing wrong? It's interesting how the words in the statement are carefully parsed - lost money on THE DEAL (Abacus). No mention of the extraordinary sums made on the hedge. Clearly, Lloyd is using the Bill Clinton school of explanations (e.g. it depends on what the definition of "is" is).
.......and " inappropriate activity " is another term subjected to strict interpretation per the Squid's tastes and sensibilities.
So is "strong record of risk management"... I guess that is the term being used these days for the theft of taxpayer money, wherever and however it can be had.
As you return to work on Monday morning, please continue to disregard all concepts of ethics and morality in the unending quest to pad your bonuses. Sincerely, Your Supreme Ruler.
Condone: To pardon or overlook
Stop: To obstruct or block
Another question for Lloyd - if GS & Co. turned bearish on the mortgage market in general (subprime specifically) in December 2006, why would GS be a LONG investor on a transaction in February 2007? It's completely counter-intuitive...unless there was a larger offsetting BEARISH bet (i.e. CDS purchase from AIG) by GS!
Lost money my ass....
Reconstruction of event timelines will be very important in discerning whether Goldman was engaged in criminal fraud or merely mind-blowing incompetence.
Goldman will of course be busy building a case supporting it's contention that they were merely mind-blowingly incompetent.
For the sake of fairness I will however try to maintain an open mind on this issue... but one has to wonder why the hell it's marks... er... 'customers' keep coming back for more.
Can they protect President Clintons virginity while protecting their reputation?
"Can they protect President Clintons virginity..."
+1111 Hephasteus
What a laugh! Clinton now claims Summers and Rubin raped him like an alter boy... while he was polishing Monica's tonsils...
If you work for another bank, would you do a deal with GS right now?
If it goes wrong you can no longer claim that you were fooled by GS's good reputation and that you had no reason to suspect GS was screwing you.
Now, if you do a deal with GS and lose money everyone will assume you're a dumbass who GS tricked.
Far better just to avoid GS for the moment and do deals with any other bank
Such a fine line between Peptalk & Perpwalk.
title typo - should have read "perptalk"
Nice one!
(Good teamwork J.C. and M.K.!)
"There is no blue dress".
Notice Israel is never on the losing end of these trades but Germany gets taken for $billions.
Hey Dollar king, go spew your garbage elsewhere.... This community will not be infiltrated. There is nothing semitic about this blog besides what you bring to the table.
LOL
Gentlemen, we strongly urge you to keep your tentacles well-polished and your bioluminescent mucus at the ready.
Rest assured that although we face a significant confrontation, any appendages that may be removed in the process shall be swiftly regrown.
We are deeply proud of our efforts to date, and we shall continue to maintain industry leadership in all aspects of face-eating, blood-sucking, skull-humping, and tenticular probing.
Ph'nglui mglw'nafh Cthulhu R'lyeh wgah'nagl fhtagn.
The "calamari cartel' at its best.
Maybe, just maybe GS lost some money, but who knows what other hedge fund entities are GS controlled?
they may be offshore entities that GS is the hidden owner. Come guys, how hard is that?
I bet they have many hedge funds all over the globe, playing the game. they are the masters of deception and government is in their pocket.
Hard to resist that much money.
Apparently Mr.Clean does actually do something besides sit in his G5 and count money.
P.S. The cougar life ad on the home page made me jumblies tingle , where do I sign?
Are you young enough? They are selective.
"The cougar life ad on the home page made me jumblies tingle , where do I sign?"
Do you think Marla and lizzy36 get these ads?
Or is it just us?
I am still waiting for that stacked blond travel agent ad to come back... I was ready to buy a cruise to Aruba...
I for one welcome our slimy mollusk overlords.
Blankshooter at his best. He will look great in a cell with Madoff
Condone..
Look the other way..mere semantics. When the dust settles we will have incontroveritble proof that Goldman and the Paulson hedge funds deliberately targeted their rival financial firms with panic for a payout. They put the United States economy at risk and assisted in creating a depression while they collect and cause job loss. All for the sake of a few individuals.These are crimes of treason and preciscely what Andrew Jackson feared. Biddle pulled the same tricks in the 1800's.
They turned AIG into a carcass for a payout and then used taxpayers as a 100% backstop with the Fed blessing. I expect Mr. Friedman will due prison time as well. He must not have slept well this weekend.
BOOYAH BABY!!!! It's time to buy some Goldman Sucks, strike that, Sachs. Surely Lord Blankfein you will understand my typo as I continue to spew the "facts" at an alarming pace that we, I mean Goldman, is clearly a buy at these levels!!!
He sounds like the Vatican. Arrogant, clueless. Accepting no blame.
The lost money bit is just a talking point. The more telling talking point is that: "The core of the SEC’s case is the allegation that one employee misled two professional investors by failing to disclose the role of another market participant in a transaction." Therefore, the Lord of the Vampire Squid knows this internal memo is or will become public record, and that will probably be the basis of their defense. Therefore, he is willing to admit fraud occurred (note the word "mislead"), but most importantly he believes that only "one employee" is to blame for the fraud. The future of this case is now relatively clear: (1st) fire the 'rogue' employee (and pay for his legal fees, after he signs a keep quiet letter with a substantial "severance" payment/payoff), (2nd) pay a fine, case closed. This explains his talk about "God's work" and acting clueless yet indignant. The key is to act indignant that this rogue employee must not be allowed to get away with this tarnishing of their good name, blah, blah, blah, ...
For me the larger question now is other lawsuits, this one is now pretty well set in stone (i.e., after this memo one can read much more clearly between the lines). The new information here is that the plan is to admit to a specific fraud, but keep this at the 'rogue' employee level and stick to that story (remember Merrill's Henry Blodget, that is the well troden path for fraud and rogue analysts/traders/investment bankers/fill in the blank; isolate, fire, defend, repeat and rinse). You can agree to force employees to take endless "ethics" classes, but as long as you generally hire and promote unethical people, well you get the idea (i.e., it results in something like the current state of affairs in U.S. finance).
Verum good lies...Well done. Looks like you nailed down their crisis management strategy here.
The "we lost money" statement is a red herring, designed to sucker away the focus of the less savvy from the real matters at hand...failing to completely disclose relevant (or "material") information about the transaction, which was required to be disclosed.
Lloyd, Cohn & Co. are now going to ask that this game's cards be read...and they will say, "The vice president did it, at his desk, with the e-mail message...(high-fives) ...See, we win. We're doing God's work."
The little Frenchmen will have to be the scapegoat for the firm to have any chance at limiting all the other liability lawsuits for which this could case otherwise serve as a precedent. And, he won't be able to hide because the British press will be following his every move, thanks to RBS' pain. (Lloyd speaking to Frenchie, "It's either you or me, and I vote "you!")
GS will have to prove that Tourre acted alone, because the SEC may have a harder time (I'm going on the evidence in the complaint) proving that a broader chain of management, including the Mortgage Capital Committee, actively drove this transaction, an easier defense than fighting the entire suit.
The real pain has been quickly inflicted upon the image of GS & Co. (although, not a kill shot)
So, now it's damage control mode at GS. Will be fun to watch this unwind and to observe the players' next moves. (Hey, it's more exciting than the NBA or Stanley Cup playoffs.)
Tiger Woods might learn something if he should be paying attention!
Mr. Spackler:
To witness this Pandora's box open up on the GVS (Giant Vampire Squid) should really be fun to watch (e.g., schadenfreude and all that goes with it). In addition, I am curious as to how fast the so called "efficient market" will realize that other fraud and fraudulent conveyance lawsuits will likely join in on the fun (and with any luck not be so one-off in nature).
For me the funny thing is the SEC firing the first salvo, which I now assume was driven by short-run political gain (i.e., to tee up the 'financial reform' legislation). Therefore, history may show that not only was the SEC asleep at the switch for a few decades, but when it seemed to finally wake somewhat, it throws out a politically motivated case that may have the final effect of demolishing just those very firms our masters claimed were TBTF in the first place. Ironic, no?
For me the funny thing is the SEC firing the first salvo, which I now assume was driven by short-run political gain (i.e., to tee up the 'financial reform' legislation). Therefore, history may show that not only was the SEC asleep at the switch for a few decades, but when it seemed to finally wake somewhat, it throws out a politically motivated case that may have the final effect of demolishing just those very firms our masters claimed were TBTF in the first place. Ironic, no?
So true...I wonder what their next trick is for dealing with the unintended consequences? Hmmm, printing even more dollars?!
This brightened my day - I imagine the guys chopping off the tentacles as Spitzer, Jesse, and Taibi - the guy throwing the javelin in the giant squid's eye is Tyler, of course...
http://www.youtube.com/watch?v=LItShL9vJfw
Where can I go to structure a deal betting on regime change at GS?
If they can't call the smart money at the moment does that mean they'll only be calling the pension fund managers?
"I would like to take the opportunity to state that there is no cannibalism in the Royal Navy, none whatsoever. And when I say 'none', I mean that there is a certain amount."
Astute Investor said it very well above, but I will ask the question in a different way.
You are Goldman and John Paulson, who you know to be pretty clever, wants to hand pick bonds he believes are the absolute worse he can find in the entire MBS market and construct a synthetic CDO. Your firm is already bearish on the RE sector, but in spite of this and Paulson's selection, you position your firm so that it can lose $90 million. That would hardly seem to exemplify the "strong record of prudent risk management" Blankfein claims for the firm. In other words, Blankfein would have us believe that the management of Goldman Sachs has more confidence in the financial acumen of the bond desks at IKB and ABN Amro than the mind of what was already one of the major hedge funds.
So GS faded John Paulson, and had no hedge. Okay, if you say so Lloyd.
Is there a "statute of limitations" for fraud? If so, how long? Civil versus criminal cases any different?
TIA
"Our people..."
As opposed to "you people..."
As a member of "you people..." I have to say Lloyd...
I have not lied to sell any worthless Michael Milken-esque junk bonds to make a fast buck lately...
How about you and "...your people" Lloyd?