What Is Goldman Alum Eric Mindich's Role As Chair Of The Asset Managers' Committee Of The President's Working Group?

Tyler Durden's picture

On September 25, 2007, the President's Working Group on Financial Markets, better known as the Plunge Protection Team, announced the formation of two private sector committees, one comprising of Asset Managers and the other, of Investors. It is the first one that is more interesting, as the committee is chaired by one Eric Mindich, best known for his Goldman Sachs wunderkind status, who at 27, was the youngest Goldmanite ever to be promoted to partner. In 2004, Eric split off from Goldman, nonetheless maintaining a favorable relationship with the mothership through its "Fund of Funds" division (we jest), and its various Prime Brokerage client platforms, by starting Eton Park, which with its starting capital of $3 billion, is still likely a record of highest AUM at a fund's inception.

So what was the justification for the creation of this specific committee. From its Mission Statement:

PRESIDENT’S WORKING GROUP ON FINANCIAL MARKETS

ASSET MANAGERS’ COMMITTEE

Mission Statement

The Asset Managers’ Committee is comprised of representatives from a broad array of asset managers. Its purpose is to facilitate an exchange of information between the alternative asset management community and the agencies comprising the President’s Working Group on Financial Markets (“PWG”). It will be a standing committee, and its members serve at the behest of the committee’s chairperson for three-year terms. Members may be reappointed for additional terms. It is expected that the committee will develop best practice guidelines, as described below, and also subsequently review and reassess, and if necessary revise, those guidelines.

The first task of the committee is to develop detailed guidelines that would define “bestpractices” for the alternative asset management industry, including practices regarding information, valuation, and risk management systems. They would foster efforts to enhance market discipline, mitigate systemic risk, augment regulatory safeguards regarding investor protection, and complement regulatory efforts to enhance market integrity. These guidelines would review and build on existing industry work and the principles and guidelines released in February 2007 by the PWG, particularly Principle 9, where possible. The initial focus will be on practices for hedge fund managers.

Yet less than a year later, the economy and capital markets collapsed, forcing Hank Paulson to launch an  unprecedented sequence of events to prevent the full meltdown of the Western World. Indeed, the same Hank Paulson who one year prior to Lehman's collapse had this to say regarding the Asset Managers' committee:

"These groups are drawn from among the industry's finest in their
respective areas," said Treasury Secretary and PWG Chairman Henry M.
Paulson, Jr. "The market will benefit if experienced participants
develop and implement best practices."

It is safe to say that whatever the committee's true mission was, its stated one was an unmitigated failure. For reference purposes, the full committee consists of the following:

  • Eric Mindich, Chair, Eton Park Capital Management
  • Anne Casscells. AETOS Capital, LLC
  • James S. Chanos, Kynikos Associates LP
  • Anne Dinning, D. E. Shaw & Co., L.P.
  • Jonathon S. Jacobson, Highfields Capital Management
  • Marc Lasry,Avenue Capital Group
  • Edward A. Mulé, Silver Point Capital
  • Daniel S. Och, Och-Ziff Capital Management
  • Daniel H. Stern, Reservoir Capital Group
  • William Von Mueffling, Cantillon Capital
  • Michael Vranos, Ellington Management Group LLC

Pardon our hypocrisy, but virtually all of these funds (with the likely exception of Kynikos) would have gotten destroyed had Bernanke, the Chairman of the PWG and the President, decided not to intervene. Furthermore, as is well know, the President's Working Group on Financial Markets has long been not only the front for the elusive Plunge Protection Team, but is an organization this is so wrapped in secrecy that not even minutes of its meetings are kept as John Crudele of the NY Post found out post his US Treasury FOIA submission. Yet the Asset Managers' Committee seems to be in that gray area where it is not totally consumed by the PWG, and thus it is possible that a record of its actions may actually not disappear into the void once any market critical decision is made.

Which is Zero Hedge is submitting a FOIA request to the US Treasury to disclose any and all information, records, emails, telephone conversations, with and amongst members of the committee and specifically focusing on former Goldman Sachs employee and Chair of the Asset Managers' Committee Eric Mindich, at and around the time of the Lehman collapse. We expect nothing but heavily redacted pages at best. Yet with recent scrutiny of latent Goldman interests in virtually every segment of the executive branch, Zero Hedge does find it oddly convenient, that in those dark (for Goldman Sachs) days, the two key people making capital markets related decisions were yet another two Goldman Sachs alumni: Hank Paulson and Eric Mindich. And we believe in the spirit of fake transparency so heavily endorsed by the President, it is worth at least attempting to get some additional information on the deliberations by the proxy entities that truly run this country's economy and capital markets.

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Lionhead's picture

Excellent & good luck with the FOIA request. You may be in court someday with that one. This is becoming more "transparent" as time goes on. The agendas of the operators can be seen.

Howard_Beale's picture

Quite of cadre of players there...and I know a few of them. You go Tyler with the FOIA.

On a side note--Vranos is a mortgage guy that created some of the most convoluted/toxic REMICS at Kidder ever sold. I think the biggest one was a FNMA deal with 108 tranches with a Jump Z (the accrual tranche)  that could fuck everyone else completely. He was always interested in "stuffing" the most toxic shit down the lambs throats with multiple obscenities at the sales force.

Now here is one place where he paid for his sins....HAHAHAHAHA--I'm sure there are more:

From Wiki- -In June 2007, Vranos launched a private placement of a new entity, Ellington Financial LLC, to institutional investors. The company aimed to specialize in subprime mortgages and the offering statement was dated for July 12, 2007. The deal was underwriten by Friedman, Billings, Ramsey, and although originally slated for a $750 million offering, evolving market conditions only allowed for a $250 million capital raise.  Before the private placement, a New York Times columnist noted that a portion of the private placement might be used to purchase risky tranches from bankrupt subprime lender New Century Financial and noted the potential difficulty in valuing such instruments.

There is some justice out there....launching a sub-prime fund in June 2007! Hilarious!

deadhead's picture

Howard...I would like to say that your insights are consistently top notch from my perspective. Thank you.

Cursive's picture

What is there left to say?  May all of these bastards face justice in our lifetimes.  Unless this economy begins improving (unlikely), the ruling elite is in for a rude awakening.  There will be no parachutes for the next fall.

. . .'s picture

Golden Sacks may just have a friendly alum on the PWG.  But Treasury has them, Pimco, Blackrock, and the gang on the Treasury's advisory borrowing committee.  See the list and link below.

If you read the committee's minutes, they've been discussing ways that index and ETF bond funds might be induced to buy treasuries.  Discussing things like how increased issuances of treasuries will increase their composition in bond indexes and keeping treasuries in indexes even if the Fed buys them will also increase their composition in indexes.  Congress ought to investigate the Chinese walls these firms use to isolate the people on the PWG and borrowing committee from traders and asset managers.  Is it possible to have a chinese wall around a CIO on a Treasury committee?  Does that require multiple personality disorder?

 

http://www.ustreas.gov/offices/domestic-finance/debt-management/adv-com/members/

CHAIRMAN
Matthew E. Zames
Managing Director
JP Morgan Chase
270 Park Avenue
New York, NY 10017

VICE CHAIRMAN
Ashok Varadhan
Managing Director
Goldman, Sachs & Co.
1 New York Plaza
New York, NY 10004

Scott Amero
CIO of Fixed Income
Blackrock
40 East 52nd St
New York, NY 10022

Keith T. Anderson
Chief Investment Officer
Soros Fund Management
888 Seventh Avenue
New York, NY 10106

Richard A. Axilrod
Managing Director
Moore Capital Management, Inc.
1251 Avenue of the Americas
New York, NY 10020

Ian G. Banwell
CEO & CIO
Round Table IMC
214 North Tryon Street, Suite 3000
Charlotte, NC 28202

Fred Brettschneider
Head of Global Markets, Americas
Deutsche Bank
60 Wall Street
New York, NY 10028

Dana Emery
Executive Vice President
Dodge & Cox
555 California Street
San Francisco, CA 94104

Paul McCulley
Managing Director
PIMCO
840 Newport Centre Drive
Newport Beach, CA 92660

Jeffrey S. Phlegar
Executive Vice President
Alliance Bernstein
1345 Avenue of the Americas
New York, NY 10105

Richard Tang
Head of Fixed Income Sales,  Americas
RBS
600 Washington Boulevard
Stamford, CT  06901

Irene Tse
Managing Director
Duquesne Capital
40 West 57th St
New York, NY 10019

Mark Werner
CEO
Pierpont Securities Inc.
2 Stamford Plaza
Stamford, CT 06901

 

Lionhead's picture

As the PIMCO folks say, "shake hands with the gov't."  The operators are just exposing themselves more to investors everyday. Now they can be avoided along with their toxic products or mutual funds. When their assets under management starts to decline, they'll get the message. Just like CNBC, keep exposing these folks.

Anonymous's picture

lots of catholics on this squad

Anonymous's picture

Chanos??? Pretty interesting

deadhead's picture

a diversity thing.

token short.

Zippyin Annapolis's picture

The purpose of this group was to suss out hedge fund Regulation, not to prevent a crash.

 

In fact, Hedge funds did not cause the crash.

 

A ton of hedge funds cleaned up on the collapse and had a granular understanding on where the blimp would split--shorted the spunk out of CLOs, CDOs and the financials, wrote CDS on the failures.

 

Who is dumber --the goofball investment banks and Uncle Stupid or the sharks?

http://www.silobreaker.com/g7-finance-ministers-ignored-warning-about-da...

 

 

Howard_Beale's picture

As far as a ton of hedge funds cleaning up on the collapse, that might be a bit of an overstatement--not trying to take away from your point, though. But I would also add that Chanos does not believe in any way that naked short selling or phantom shares are a problem. 6 billion fails a day in the words of Chanos, a non-issue. Tell that to Patrick Byrne.

Zippyin Annapolis's picture

Do you mean that folks usually talk their business model?

Gambling in the casino? C'est impossible!

Check out the link--

 

 

Howard_Beale's picture

I checked it out and as I said, I was not trying to take anything away from the point you were  making. I was just saying that plenty of hedge funds lost lots of money--Einhorn, Chanos, Paulson, etc were the standouts that made huge amounts and became celebrities. I have no problem with legal short selling either, as I do it often. However, I was stating that the naked shorts were out of control last year. You should not be able to trade more shares than exist of a company, no matter how right you are.

Zippyin Annapolis's picture

Yes got the point.

The changes to 204(T) under Reg SHO have had an effect--also there will be continued pressure to go to a hard borrow requirement sooner than many suspect.

Anonymous's picture

"You should not be able to trade more shares than exist of a company, no matter how right you are."

absolutely and the same applies to any market
especially commodities....

the sec went out of its way to blubber about
its new limits for longs but quiet as
a cadaver on shorts....

without naked unrestricted shorting the ppt
has no basis for controlling markets down....

all they have done is bring about price controls
via opaque market operations - they are just
more sophisticated than their soviet counterparts
and 10x more immoral than the atheists...

it's central planning in an invisible box...

Hephasteus's picture

Hedge funds always cause crashes. Because they are the ONLY highly leveragable players. I mean come on it's like they are out there buying and selling and speculating on stuff using the ENTIRE wealth of the country. While you think your money is quietly sitting in the bank or a money market fund it's out screwing up the economy through a hedge fund. To get a crash you always have to have these huge speculative movements then you simply yank thier call money and it creates a crash.

Hedge funds are pretty harmless right now as they have done their job. But now you have the danger of the system wanting to correct itself. They are not "counterfitting" large blocks of stocks and large blocks of  money.

http://www.contraryinvestorscafe.com/broadcast.php?media=66

But now we will enter a correction phase that's simply a spastic spasms of a system that isn't balanced on liquidity and solidity because valuations take us so far out on exponentially increasing curves that it stretches every buying and selling transaction to a tension filled disaster.

Zippyin Annapolis's picture

Heph

GS, MS, LEH, C, and other investment banks had 30 to 1 leverage before the meltdown--most hedge funds had 3-4 to 1.Check it out.

 

The wealth of the country is in the hands of the Fed/ Treasury--runners up are asset gatherers like PIMCO, Black Rock and mutual funds, the former investment banks (now bank holding companies with 15 to 1 leverage BTW--hedgies are pimples on the country's capital structure butt.

 

 

Hephasteus's picture

That's the "lie". Hedge funds were counterfeiting millions of shares of stock. Just becasue GS and everybody were being the hedge funds directly doesn't mean the multitude of other hedge funds out there weren't very necessary to the collapse. The hedge fund industry is hidden in the mutual funds industry. They broke the buck down to 97 cents on the collapse. Just by gaining control of the 401k industry they were able to set up the exact same collapse as during 1929 without it backtracing to the banks like it did before.

Letting hedge funds tell you thier numbers and measures is not a wise thing to do.

Zippyin Annapolis's picture

I respect that view but differ on the analysis. No one "forces" anyone into investing in a hf--I am in 2 and it is a crap shoot--so?

Anonymous's picture

hedge funds, regualr funds, even fannie and freddie
did not cause the collapse....they were
colinear phenomena....

the collapse was caused by an overextended and
exhausted consumer and producer....yes the
financial wizards induced the exhaustion but
were not its immediate cause....and when
consumer and producer collapsed it triggered
a cascading crisis in the highly leveraged
financial world....

and whether prosperity or poverty the elite
wall street firms do not even blink an eye lash -
a testimony to their visceral evil.

Anonymous's picture

The purpose of this office was to go to the beach:

CORRUPTION: Credit Suisse's Charter MUST BE REVOKED

http://market-ticker.denninger.net/archives/1450-CORRUPTION-Credit-Suiss...

Careless Whisper's picture

dammit. i forgot to use a proxy.

JohnKing's picture

With all that muscle on the PPT how high does the market go? Obama certainly isn't going to rein in anything that looks positive.

agrotera's picture

Someone posted this the other day, and the PPT is a PERFECT living example of:

"The great mass of people... will more easily fall victim to a big lie than to a small one." Mein Kampf, Vol 1, Chap. 3

 

The FOIA request won't capture all the prepaid cell phones and anonymous email connections between each of these parties and their private traders....no way to follow this crime without a new HONEST, REAL and GARGANTUAN FBI investigation to follow each party and the details of their actions....the PPT is one more level of corruption for the privately held federal reserve and their affiliated bankster cartel members--it is so much more than WRONG.....Imagine how the US citizens and all the 401k, IRA owners would feel if they knew this was going on...I hope others will follow your lead and OUT the PPT to the public.

Anonymous's picture

the fbi would investigate this the way inspector
clouseau would and the way in which it
investigated the kennedy assassination into
oblivion....no help there.....

the fbi reports to the executive and it is the
white house politburo which would destroy any
investigation....

the only way to get a real investigation is to
vote out barry soetoro mubrak hussein "
transparent joe" obama and every single congressman
good or bad....it could be done....

agrotera's picture

...YOU ARE RIGHT ANONY!   I guess wishing for a non-corrupt investigations is a fantasy since almost our whole government has been purchased and anything that would show the criminality of the financial system won't be exposed until we get a new crew that is dedicated to being 'UNTOUCHABLES".

Careless Whisper's picture

Let's not leave out Mr. Daniel S. Och and his Goldman Sachs "experience".

It appears that Robert E. Rubin (not to be confused with James S. Rubin of One Equity Partners - aka JPMorgan) may deserve an honorable mention here too, as Mr. Mindich was one of his proteges while at Goldman Sachs. So far only 1 of Robert Rubin's 6 protege's has every served any jail time.

http://www.alternet.org/workplace/131568/how_robert_rubin%27s_bright-eyed_proteges_came_to_dominate_wall_street_/%3Fpage%3Dentire+%E2%80%A2Eric+Mindich,+Chair,+Eton+Park+Capital+Management+and+%22goldman+sachs%22&cd=17&hl=en&ct=clnk&gl=us

 

 

Anonymous's picture

aren't einhorn and chanos total crooks a la "deep capture"? how can they be discussed as smart or not smart or wrong or right?