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May 23, 2014

Exclusive: Goldman’s Cohn takes on Washington to defend commodities

NEW YORK (Reuters) – Sen. Sherrod Brown, a Democrat from Ohio, and Goldman Sachs Group Inc. President Gary Cohn, who’s from Cleveland, are friendly enough that Brown has been known to rib Cohn for abandoning the Cleveland Indians baseball team in favor of the New York Yankees. The two men first met years ago, and Cohn and his family, who are also Democrats, have contributed to Brown’s campaigns.

They may like each other, but the two men are antagonists in a battle over whether Goldman can maintain its lucrative role in physically trading stuff ranging from aluminum to coal to natural gas to zinc.

May 23, 2014

Goldman’s Cohn takes on Washington to defend commodities

NEW YORK, May 23 (Reuters) – Sen. Sherrod Brown, a Democrat
from Ohio, and Goldman Sachs Group Inc. President Gary Cohn,
who’s from Cleveland, are friendly enough that Brown has been
known to rib Cohn for abandoning the Cleveland Indians baseball
team in favor of the New York Yankees. The two men first met
years ago, and Cohn and his family, who are also Democrats, have
contributed to Brown’s campaigns.

They may like each other, but the two men are antagonists in
a battle over whether Goldman can maintain its lucrative role in
physically trading stuff ranging from aluminum to coal to
natural gas to zinc.

May 8, 2014

U.S. banking regulators hire math geeks of their own

May 8 (Reuters) – A few years ago, famed financial engineer
Andrew Lo built a computer model that allowed one of the biggest
U.S. banks to figure out which customers were most likely to
fall behind on credit-card payments.

More recently, the Massachusetts Institute of Technology
finance professor has been laboring for another client: the U.S.
government. Working with banking regulators at the Office of the
Comptroller of the Currency, an arm of the Treasury Department,
he’s helping build quantitative tools to find potential credit
risk in the banking industry, starting with the mortgage market.

May 8, 2014

Exclusive: U.S. banking regulators hire math geeks of their own

By Lauren Tara LaCapra

(Reuters) – A few years ago, famed financial engineer Andrew Lo built a computer model that allowed one of the biggest U.S. banks to figure out which customers were most likely to fall behind on credit-card payments.

More recently, the Massachusetts Institute of Technology finance professor has been laboring for another client: the U.S. government. Working with banking regulators at the Office of the Comptroller of the Currency, an arm of the Treasury Department, he’s helping build quantitative tools to find potential credit risk in the banking industry, starting with the mortgage market.

Apr 26, 2014

Exclusive: Morgan Stanley makes ‘riding the calendar’ less lucrative for brokers

NEW YORK (Reuters) – Wary of brokers who make their money by “riding the calendar” of new stock and bond issues rather than patiently building the firm’s wealth management business, Morgan Stanley (MS.N: Quote, Profile, Research, Stock Buzz) is cracking down where it hurts the most: compensation.

Since April 1, Morgan Stanley Wealth Management financial advisers have seen their compensation cut by as much as 50 percent on sales of new issues to clients who use the firm primarily to get allocations of those securities. The severity of the pay cut varies, but some top earners are seeing payouts cut by half. The new system applies when more than 70 percent of the business from a client comes from those deals.

Apr 26, 2014

Morgan Stanley makes ‘riding the calendar’ less lucrative for brokers

NEW YORK, April 25 (Reuters) – Wary of brokers who make
their money by “riding the calendar” of new stock and bond
issues rather than patiently building the firm’s wealth
management business, Morgan Stanley is cracking down
where it hurts the most: compensation.

Since April 1, Morgan Stanley Wealth Management financial
advisers have seen their compensation cut by as much as 50
percent on sales of new issues to clients who use the firm
primarily to get allocations of those securities. The severity
of the pay cut varies, but some top earners are seeing payouts
cut by half. The new system applies when more than 70 percent of
the business from a client comes from those deals.

Apr 25, 2014

Fed, OCC differ in enforcing leveraged lending guidelines

NEW YORK, April 25 (Reuters) – Some major U.S. banks are
privately complaining that they are getting the short end of the
regulatory stick when it comes to the profitable business of
lending to heavily indebted companies.

Banking and regulatory sources with direct knowledge of the
situation said the U.S. Federal Reserve and the Office of the
Comptroller of the Currency (OCC) appear to be taking different
approaches to implementing a set of guidelines on leveraged
loans, even though they issued them jointly in March last year.

Apr 22, 2014

Goldman buys Westpeak in drive for ‘smart beta’ assets

NEW YORK (Reuters) – Goldman Sachs Group Inc’s (GS.N: Quote, Profile, Research, Stock Buzz) asset-management business has agreed to buy Westpeak Global Advisors, a firm that aims to beat market indexes by using factors other than company size to pick stock investments.

The deal, disclosed on Tuesday, comes as Goldman is working to bulk up its asset management unit, partly by strengthening its quantitative product offerings. It is also part of a broader trend of money managers offering so-called “smart beta” strategies that deliver the high returns of some actively managed fund but with the lower cost of investing in an index fund or exchange-traded fund.

Apr 18, 2014

For Morgan Stanley, playing it safe pays off

By Lauren Tara LaCapra

(Reuters) – A year ago, soon after Morgan Stanley posted disappointing quarterly earnings, Chairman and Chief Executive Officer James Gorman told board members the bank was on the right track and investors who sold shares had made a mistake.

On Thursday, Gorman proved himself right, by showing that his plan to lighten up trading risk and focus on wealth management is paying off. Morgan Stanley posted a 55 percent gain in first-quarter profit. The bank’s revenue from fixed-income trading rose 9 percent from the same quarter a year ago, even as it reduced risky assets by tens of billions of dollars. Morgan Stanley also showed steady progress in using deposits from the wealth business to lend more.

Apr 17, 2014

Amid frigid winter, Goldman, Morgan Stanley see commodity gains

LONDON/NEW YORK (Reuters) – Goldman Sachs (GS.N: Quote, Profile, Research, Stock Buzz) and Morgan Stanley (MS.N: Quote, Profile, Research, Stock Buzz) both cited stronger commodities trading as a bright spot in the first quarter, aided in part by extraordinary volatility caused by the coldest U.S. winter in three decades.

The two longest-serving banks in the sector took on more risk in the quarter, and may be benefiting from rivals scaling back or quitting the raw materials trading business due to new capital and trading regulations and slimming profit margins, underscoring the benefits of sticking out a tough patch.