Having lost much of its central banker incubation skills over the past decade, and handing over the crown of Wall Street's most profitable trading desk to Morgan Stanley, in recent years Goldman Sachs has been best known for enabling and profiting wildly from Malaysia 1MDB criminal fraud, which culminated with the arrest of former Malaysia PM Razak, but not before Goldman made billions in illicit profits from selling bonds offered by the country's sovereign wealth fund.
And while Goldman is still waiting to learn its criminal and civil fate, and more importantly, how many billions it will have to pay Malaysia/the DOJ to put its 1MDB fraud in the rearview mirror, the company - which a decade ago was hoping to make billions from aggressively entering the carbon credit/offset market as profiled delightfully in Matt Taibbi's "The Great American Bubble Machine" - is already scheming how to profit from the latest round of anti-climate change euphoria, conveniently spawned by a 16-year-old child with Asperger's Syndrome.
On Monday, Goldman Sachs said it will provide $750 billion in financing, advisory services and investments for initiatives that fight climate change, as well as those that foster economic opportunities for under-served people over the next decade. What Goldman did not say is that it will pocket a generous commission, somewhere in the 3-5% ballpark, by peddling "green" products to naive investors (including central banks) who have fallen for the whole ESG virtue signalling charade.
The bank also updated its internal environmental policy framework to rule out providing financing to any new projects that will drill for oil in the Arctic or that create new thermal coal plants or new thermal coal mines. Of course, the destructive consequences of the bank's involvement in the 1MDB scandal would be quietly excluded from this virtuous charade.
Ironically, Goldman's policy changes come just as the United Nations concludes a conference that failed to ramp up efforts to combat global warming, according to Reuters.
Goldman CEO David Solomon announced the plans in an editorial in the Financial Times, where he wrote that there is "a powerful business and investing case" for the bank to take steps to address climate change and the growing worldwide opportunity gap. Very powerful: having failed to make almost any money from the bank's last foray into carbon tax and cap-and-trade, Goldman is now seeking to directly appeal to fellow fake virtue signalers, who in turn will hope to extract capital from naive investors pursuing the oh so noble goal of only investing in green, renewable, and "clean" (whatever that means) projects. Goldman's bottom line, assuming a blended 3% commission on the $750BN in financial services it sells to gullible clients, works out to about $22.5 billion - a "powerful business case" indeed.
Additionally, Goldman emphasized that it will not pass up any significant amount of revenue as a result of the $750 billion commitment and the ban on financing certain drilling and coal activities. A Goldman Sachs executive said on a call with reporters that the bank has not financed any projects like those in recent memory. However, since US shale producers, most of whom are funded by the ultra-generous US junk bond market, are hardly losing sleep, it only means that other, less "virtuous" banks will be delighted to pocket a far higher commission by stepping into the "dirty" market where ESG virtue signalers now refuse to tread.
And speaking of drilling and coal activities, the bank said it has a rigorous due-diligence process that takes into consideration, among other things, impacts on endangered species and indigenous populations, the executive said.
The $750 billion commitment will be deployed in several ways, including by investing in and advising companies to take steps to reduce their carbon emissions and become more sustainable, the bank said. For example, earlier this year Goldman worked with Italian electricity company Enel to raise $1.5 billion through a bond offering that linked the investments to Enel’s commitment to increase its renewable energy base by 25% before 2022.
Translation: Goldman made about $15 million selling a bunch of bonds to a bunch of "green" liberals managing other liberals' money. Because when central banks have taken over the market and Goldman's own trading desk is shrinking quarter after quarter, and when the coming negative rates will make Goldman's recent investment into retail banking a disaster, one can always make money betting on liberal guilt, and nobody knows this better than Goldman Sachs... and Greta Thunberg.
And just in case Thunberg falls short of sparking the next major revenue driver on Wall Street, there is always the Fed. On Monday, the San Fran Fed published a paper titled "The Economics of Climate Change: A First Fed Conference" in which the authors concluded that "the economic consequences of climate change are likely to be substantial and will require responses from a wide range of policy institutions". More importantly, they will make tens of billions in revenue for such idealistic, progressive, "green" organizations as Goldman Sachs.
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In parting, we remind readers what Matt Taibbi wrote about "the great vampire squid wrapped around the face of humanity" almost a decade ago: "From tech stocks to high gas prices, Goldman Sachs has engineered every major market manipulation since the Great Depression — and they’re about to do it again." Fast forward ten years when, with the help of Greta, Goldman is about to do it all over again.