Felix Salmon

Schwab’s YieldPlus: The denouement

By Felix Salmon
April 26, 2010

The LAT’s Walter Hamilton makes a good point: with all the brouhaha over Goldman Sachs, how come the Charles Schwab news is considered positive for the company? Schwab’s stock rose by 1% after it said it would pay $200 million to settle a class action suit over its YieldPlus fund, which imploded after the company filled it up with toxic mortgage assets.

The Goldman wars continue

By Felix Salmon
April 24, 2010

There is no scandal whatsoever associated with Goldman Sachs emails released by Senator Levin today. They show Goldman people going about their line of work, doing what Goldman people do, taking long positions, taking short positions, sometimes even taking big short positions. This is what broker-dealers should do if they have decent risk management.

The Abacus prospectus

By Felix Salmon
April 23, 2010

I know you’ve been waiting for this one — here you go! Enjoy all 196 pages of it, and let me know what you find: Matthew Goldstein has already found a Goldman conflict of interest on page 71 (page 77 of the PDF) — the “Initial Collateral Security that is a CLO Security” turns out to be another Goldman product. Which is not obvious from the prospectus at all, since it isn’t even named.

Goldman’s biggest lie

By Felix Salmon
April 23, 2010

Alea has given us Abacus for Dummies: a very useful quick overview of the structure of the deal. And in doing so, he helps to reveal Goldman’s biggest lie.

How important is IKB’s sophistication?

By Felix Salmon
April 23, 2010

John Carney has a defense of Goldman Sachs up at the Daily Beast, based on the not-novel-at-all idea that the investors in the Abacus deal were sophisticated.

USAA’s anti-finreg campaign

By Felix Salmon
April 23, 2010

The Euro-style bancassurance business model has never really taken off in the U.S., but there’s one big exception: USAA, the financial services company for military families. It’s an insurer which owns an excellent bank, and that structure — which is unusual if not unique in this country — puts it into conflict with the Volcker rule. Insurers, by their nature, invest in diversified portfolios of stocks and bonds, which is an activity which looks very much like prop trading if you’re a bank. Since the Volcker rule would ban prop trading at banks, USAA is worried that it will fall foul of it.

Counterparties

By Felix Salmon
April 22, 2010

Obama’s speech as delivered — White House

TIME was writing about “banksters” in 1933 — Time

The change in composition of US exports to China over the past 10 years — CFR

Has the SEC changed the culture of Wall Street?

By Felix Salmon
April 22, 2010

Michael Lewis addresses the fixed-income group at Goldman Sachs:

The masses will be curious to know, for instance, how you became blinded to the very simple difference between right and wrong. The more moralistic among them will ask the question mainly to fuel their own outrage; the more tactical will ask the question because they sense that the financial system doesn’t function unless you have the incentive to think in these terms — and you clearly do not.

Paulson’s letter appears, but not in the press

By Felix Salmon
April 22, 2010

When the WSJ and FT wrote articles about Paulson’s letter to investors yesterday, I was cross: I wanted to see it, and they neither posted it nor linked to it.* Since then, it has appeared on both Zero Hedge and the Big Picture; it can be downloaded directly here.