Comments on: Blithe Blankfein A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 By: Dan Sat, 17 Oct 2009 03:41:07 +0000 Thank you very much Lloyd. You are scaring everyone into socialism.

Borrowing as a bank at nothing from the Fed discount window and then using the proceeds to trade is taking taxpayer money.

Dealing in derivatives where blowups are a concern of the government is taking taxpayer money.

Taking 12B of AIG bailout funds is taking taxpayer money.

HFT used for frontrunning legitimate investing, using advantageous relations with the treasury for profit, these are taking public money without providing a service.

Goldman does a lot of useful and important business activity, no question. We need the good things they do. But they are souring the public to capitalism through activities which, while perhaps legal, are not moral or fair.

Blankfein’s assertion that the bailout money was not needed is laughable. If there is a systemic collapse all investment banks would fail. They were levered substantially like everyone else. If you are highly levered, your do not withstand a depression, full stop.

By: Rose Eli Fri, 16 Oct 2009 04:16:42 +0000 Let’s see when Goldman Sachs is broken up by anti-trust law and the anti- too-big-to-fail policy works to dissolve the remaining “big” financial institutions into debris.

By: Jr Deputy Accountant Thu, 15 Oct 2009 21:27:28 +0000 I find it fascinating that Lord Bankfiend feels compelled to trumpet Goldman’s greatness right now – were he wiser, he’d shrink off into the depths of the GS cave and hide out until the angry mob forgets they are upset and goes back to watching American Idol.

Felix, I disagree with your assessment that LB should be concerned about any sort of regulation, TBTF or otherwise. Surely Mr Blankfein is more than aware that he and his firm are protected from any sort of inconvenience like regulation. TBTF? Sure, everyone but Goldman.

Leave TBTF to the peasants, this is Goldman we’re talking about here.

By: csissoko Wed, 14 Oct 2009 19:20:14 +0000 I think the problem with Blankfein’s column is that he’s confusing two kinds of systemic risk: systemic liquidity risk and systemic credit risk. Central banks are only responsible for systemic liquidity risk. The private sector is responsible for systemic credit risk — at least in a functional financial system.

By: Marshall Auerback Wed, 14 Oct 2009 18:31:20 +0000 Felix,
There is another solution. You can mandate that banks hold loans to maturity. “Hold to maturity” seems to me a good starting point. To be sure, an inevitable byproduct of restricting securitization or proprietary trading is that they can and will reduce a bank’s profitability, but the regulation keeps them aligned with public purpose — namely, providing an ongoing, stable basis for lending, independent of market conditions — while avoiding the incentive for banks to game the higher capital requirements via questionable accounting scams.

Securitization has generally increased risk enormously, and misallocated it, without providing long-run advantages. It is true that eventually we will probably have to cover everybody, not just the banks, if we are to rely on a “hold to maturity” standard. The unregulated non-prime speciality mortgage lenders proved this. It has been rationalized based on potential increased bank risk adjusted profitability, which is outside of the public purpose behind banking – namely a government public/private partnership. Banks are set up and supported by government for the further benefit of the macro economy via providing a payments system and lending in a way that is specifically defined by regulators. The public purpose of banking is NOT to provide profits per se to shareholders. Rather, the provision of the ability to earn profits is only a tool used to support the attendant public purpose.

By: Structured Products Guy Wed, 14 Oct 2009 18:10:37 +0000 @ Praedor

Nice idea but…. not really. Following the switch over to a new payscale, almost all of your key employees who can go elsewhere, or can afford to take a few years off, just leave. I know, I know, “they caused the mess so we’re better off if they leave.” WRONG! This is a completely ignorant statement, and if you think it’s a good way to go about unwinding and liquidating failed firms, it shows your ignorance as to how derivatives and securitizations work. In any unwinding or liquidation of a firm, you NEED former employees, even ones who caused the mess! They are the ones who have the most intimate knowledge of the crap that is on the balance sheet and how to get rid of it. If you think they can’t find jobs elsewhere.

So go ahead, and bring in outside workers, almost of all whom didn’t work on the Street because they were too dumb to make the cut in the first place. Great idea. Take that AIG bailout of 180 billion and round it up to 200+ billlion if you practice your idea. yeah, it sucks to keep paying these guys good money for costing us billions, but the alternative is even worse.

By: winstongator Wed, 14 Oct 2009 17:37:41 +0000 I like Praedor’s idea, but would apply it to anyone taking even just govt guarantees – FDIC insurance included – gets teh GS payscale.

By: Praedor Atrebates Wed, 14 Oct 2009 15:57:40 +0000 My answer to too-big-to-fail and any and ALL financial/banking bailouts in the future: As soon as you take government (taxpayer) money, your pay structure goes GS. At the top (Blankenfein), you are now a GS-13 with payscale to match. No bonuses, no perks, nothing. Plain Jane GS pay. Don’t like it? Tough titty. You other option is to lose the entire shebang and go bankrupt.

Bankruptcy laws altered so that ALL the wealth of the execs that did the stupid is on the block to pay back investors. Not just corporate assets are up on the chopping block, but PERSONAL assets.

You want to go stupid and crazy and try for the solid gold ring? Ok, but if you fail as craptacularly as they ALL did in the meltdown, then they not only don’t get the gold ring, they also cough up EVERYTHING they obtained in the lead up to the shit hitting the fan.

By: Ed Wed, 14 Oct 2009 14:12:27 +0000 “If there’s a problem, its the capital rules not M2M.”

There’s no one single problem, but there is one way to make a lot of these problems less systemically serious – by putting a hard limit on leverage. Canada does that, and it seems to work for their banks.

No need to explain why Goldman would not be a fan of such a limit.

Ps. WM, glad you enjoyed my ZeroHedge audition

By: thruth Wed, 14 Oct 2009 13:49:08 +0000 +1 Structured Products Guy

If there’s a problem, its the capital rules not M2M.