Receiving Wide Coverage ...
Goldman Reflections: Columnists and bloggers keep parsing Greg Smith’s bombshell op-ed in the Times last week, in which he announced he was quitting Goldman Sachs because in his view the firm had ditched “customer focus” for a profit-at-all-costs mentality. The Journal’s Francesco Guerrera has a somewhat jaded reaction: “Those who venture on Wall Street should, by now, expect to be treated more like counterparts than clients.” Goldman erred by denying this reality and publicly insisting it puts clients first, Guerrera argues; its executives would have done better by dropping such pretenses and “explain[ing] how the business of finance really works.” In the FT, Tom Braithwaite compares Smith’s broadside to the campaign waged by a group of former Morgan Stanley executives and directors against its then-CEO Phil Purcell seven years ago. Smith’s “fretting over the ‘toxic’ culture at Goldman appealed to the consciences of his banks’ stakeholders; the Morgan Stanley group appealed to their wallets,” and largely for this reason Smith probably won’t have as much impact, Braithwaite writes. He also reminds readers that despite the portrait Smith painted of Goldman as a ruthless, bloodless profit machine, its recent financial performance has been so-so. CEO Lloyd Blankfein “should worry less about the criticism of Mr. Smith and more about making money,” Braithwaite writes. In the Times, law professor and “White Collar Watch” columnist Peter J. Henning uses the Smith allegations, and a recent court ruling assailing Goldman’s work advising El Paso on its sale to Kinder Morgan (a company in which the investment bank held a large stake), as a springboard to look broadly at how Wall Street firms manage conflicts of interest. The Times separately profiles Three Ocean Partners, a new boutique investment bank that has insulated itself from Kinder Morgan-style conflicts by taking on just one client per industry.
Wall Street Journal
A story on Citi’s sale of its entire stake in a Chinese bank suggests new regulatory capital requirements motivated the U.S. institution to unload the shares.
"The EU has set its sights on increasing supervision of the shadow banking industry."
Following the generally favorable stress test results, some big financial institutions took advantage of a drop in borrowing costs. Bank of America, AIG and Morgan Stanley floated a combined $5.3 billion of bonds.
New York Times
“BreakingViews” argues the worst of the housing crisis may now be over, despite the large shadow inventory of distressed homes that will eventually hit the market. The column cites improved affordability (prices relative to incomes have almost come back down to Earth), pent-up demand, and the recent employment gains.
Robert Bales, the soldier accused of killing 16 Afghan civilians, worked as an equity trader before he joined the military — and was found liable for fraud and unauthorized trading and ordered to pay $1.4 million in arbitration.