Bailout

Goldman?s unwanted super-senior position

Posted on April 20, 2010
Kate Kelly has the obvious answer to the question of what on earth Goldman Sachs was doing with that 45-50% super-senior tranche:

How the SEC cracks down on unethical behavior

Posted on April 20, 2010
Emanuel Derman has a fantastic two-line blog entry on the SEC/Goldman affair, which I can't really help but quote in full:

Goldman?s defense

Posted on April 20, 2010
The thing which struck me most about Goldman's earnings call this morning was how guarded they were. For a company which has happily been talking to the press and leaking the letters it sent to the SEC, no one on the call seemed to want to talk candidly about the SEC lawsuit, the Abacus deal, or anything related to them: once the formal statement was over -- which added nothing substantial to the press releases we've already seen -- the Q&A elicited very little in the way of useful information.

Counterparties

Posted on April 19, 2010
Wherein Pimco wheels out a robot named "Neel Kashkari" which unfortunately fails the Turing Test -- Pimco

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Why Goldman didn?t see the SEC suit coming

Posted on April 19, 2010
Jim Surowiecki is right about one thing: the SEC/Goldman/Abacus story has, at its heart, a story of people who were looking backwards at what had happened in the past, and therefore couldn't see in front of their noses to what was just about to happen in the immediate future...

Would a Goldman disclosure have helped?

Posted on April 19, 2010
I'm still working my way through the two Goldman Sachs responses to the SEC, as posted by Alphaville -- the 49-page September 10 memo, and the 20-page September 25 follow-up. But even without reading the whole thing, it's easy to dismiss the section excerpted by Henry Blodget, which claims that the kind of disclosure the SEC was looking for "would provide a potential investor with no information the investor did not

Why the Abacus investors weren?t speculators

Posted on April 19, 2010
Back in 2007, I embarked upon a doomed attempt to explain that asset bubbles were not necessarily speculative bubbles. There might be a bubble in the art world, I said, but it wasn't speculative. And neither were home-price increases speculative in 2000, before the tech bubble had even burst...

Goldman?s misleading statement on ACA

Posted on April 19, 2010
Goldman Sachs has yet another statement out on the subject of the SEC charges against it, which adds little to the last two. But since Goldman is making such a big deal of it, let's take a closer look at ACA's "investment" in the Abacus deal. Here's Goldman, which doesn't seem to have put this latest statement up on its website:

The Climate Desk launches

Posted on April 19, 2010
The Climate Desk has launched! It's an exciting collaboration, and I'm pleased to be a part of it. My piece is one of two complementary articles; the other comes from Clive Thompson, and explores a lot of the ways that companies are looking to profit from climate change...

Skipping the risk mismanagement

Posted on April 19, 2010
Felix Salmon is a Reuters Blogger. This piece was produced by the Climate Desk collaboration. About a decade ago, Miguel Torres planted 104 hectares of pinot noir grapes in the Spanish Pyrenees, 3,300 feet above sea level. It’s cold up there and not much good for grapes?at least not these days...

Time for contrition from Rubin and Goldman

Posted on April 19, 2010
Robert Rubin ought to be feeling a bit uncomfortable this morning, in the wake of public comments from two men he is very closely associated with. First, there's Bill Clinton:

SEC started investigating Abacus in 2008

Posted on April 18, 2010
Talk about Goldman not disclosing material information. I'm not talking about Abacus here, I'm talking about the fact that Goldman knew as far back as last September that the SEC was on the warpath with respect to Abacus, and gave no hint to shareholders that there might be legal trouble afoot.

Siwoti Sunday: Blodget?s bizarre Goldman apologia

Posted on April 18, 2010
After covering the Martha Stewart trial for Slate, Henry Blodget delivered his verdict: both Stewart and her broker, Peter Bacanovic, were not guilty on all counts. But at least he disclosed that he was prejudiced and that he ?wouldn't mind seeing the government get egg on its face?:

Counterparties

Posted on April 17, 2010
Bond Girl on Goldman Sachs -- Self-Evident

How ACA was misled

Posted on April 17, 2010
Steve Waldman has the single best explanation of what was going on in the Abacus deal and why Goldman is so culpable. He makes a lot of really good points, and it's well worth reading the whole thing. But it's especially worth pointing to this bit:

Open questions about the Abacus deal

Posted on April 17, 2010
There are a few questions I'd love to see answered about Goldman's Abacus deal:

Counterparties

Posted on April 16, 2010
Central clearing of derivatives is a good idea -- but only if the clearer is robust. There are questions over IDCH -- Risk

Parsing the new Goldman statement

Posted on April 16, 2010
Good news! Goldman has just released a much longer statement on the Abacus affair. It's worth delving into:

Goldman?s reputation in tatters

Posted on April 16, 2010
It's not easy to parse a one-sentence statement, but Goldman's declaration that "the SEC?s charges are completely unfounded in law and fact and we will vigorously contest them and defend the firm and its reputation" seems ill-advised to me, mainly because it's so obviously untrue...

The Abacus pitchbook

Posted on April 16, 2010
Here is the Goldman Sachs pitchbook for the Abacus deal in question today. It spends 30 pages talking in great detail about ACA and its qualifications to manage CDOs; it never mentions Paulson. Here's my favorite bit:

Levering up your retirement account

Posted on April 16, 2010
Barbara Kiviat has a Q&A with Ian Ayres and Barry Nalebuff, who have taken their paper explaining why young people should buy stock on margin, and have turned it into a book.

Goldman?s Abacus lies

Posted on April 16, 2010
The SEC suit against Goldman Sachs (full complaint here, and well worth reading) is explosive stuff. Essentially the SEC seems to have nailed down the kind of behavior that ProPublica was looking for in its story on the Magnetar Trade -- a hedge fund which was short mortgages, in this case Paulson, was carefully picking nuclear waste to put into synthetic CDOs, unbeknownst to the final investors in those deals.

The punitive bank tax

Posted on April 16, 2010
Jamie Dimon's attempt to push back against the Obama administration's proposed bank fee only goes to prove just how out-of-touch Wall Street really is:

Counterparties

Posted on April 15, 2010
BofA now supports modifying mortgages in bankruptcy -- HuffPo

When right-to-rent meets principal reduction

Posted on April 15, 2010
What happens when you cross right-to-rent with mortgage principal reductions, and turn the whole thing into an entirely voluntary private-sector program with no government involvement whatsoever? It might look a little bit like American Homeowner Preservation, a for-profit company which has a very interesting idea for keeping people in their homes.

Shleifer vs Milken on financial innovation

Posted on April 15, 2010
Yesterday I went to a seminar at NYU where I heard Andrei Shleifer defend his paper on how financial innovation causes crises. At the same time, Mike Milken published an op-ed saying that financial innovation is a wonderful thing, and that what we really need to worry about is too much leverage and too little assiduous underwriting...

Pirrong on the CME and Lehman

Posted on April 15, 2010
Craig Pirrong has a thoughtful response to the unredacted Valukas report on the CME and Lehman, and in particular to my take on it. He explains clearly the reasons why Lehman's CME positions were sold for $1.2 billion less than their market value:

Worrying about a Greek bank run

Posted on April 15, 2010
I haven't previously heard of Cumberland Advisors, a money manager in Sarasota, Florida. But they've been writing some great stuff on the subject of Greek bank runs. First of all David Kotok set the stage:

Goldman?s scandal-prone board

Posted on April 15, 2010
It's pretty clear now why Rajat Gupta stepped down from Goldman's board of directors last month -- the only question is why it took him so long. Galleon's Raj Rajaratnam was charged back in October, along with McKinsey director Anil Kumar; Gupta was not only the former head of McKinsey but was and is a close friend and business associate of Rajaratnam:

Counterparties

Posted on April 14, 2010
Judd Gregg seems to think the Dodd bill mandates exchange trading of derivatives. It doesn't -- FT

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