Memo to Treasury Secretary Tim Geithner: If you want to survive another year in Washington, start channeling your inner Jimmy Hoffa.
Yes, Hoffa -- James P. Hoffa, that is -- the current Teamsters boss and the one man who has stared down Goldman Sachs and the big-money crowd on Wall Street and come out a winner. While our Treasury Secretary has been busy covering the friendly tracks he laid as NY Fed Chief, in recent weeks Hoffa has showed Lloyd Blankfein and Co. who's boss -- and did so without even breaking a sweat.
The Hoffa v. Wall Street battle began back in December and received little notice, but taxpayers should pay attention to the kind of deal that can be cut when a tough cookie like Hoffa is driving the negotiations.
Tuesday, January 12, 2010
Hoffa vs. Goldman Sachs
Hat tip to the Automatic Earth (a daily read for me) for this great find.
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Kill Wall Street Bonuses or Tax 'em to Death, MIT's Simon Johnson Says
Simon Johnson, professor at MIT's Sloan School of Management and former chief economist of the IMF, says there's a simple solution to this seemingly complex problem: "People working at our largest banks - say over $100 billion in total assets - should get zero bonus for 2009."
Looking back, all the big firms were saved by the various government programs, including Goldman Sachs and Morgan Stanley were allowed to convert to bank holding company status in 2008, Johnson says. "There were unconditional bailouts for all our big banks - it was a decision made on the fly in the crisis. Let's not second-guess," he says. "But no way that strategy implies, requires, or is consistent with the banks then paying all that money out to their employees."
By contrast, when the government instituted a similar "recapitalization" strategy for banks after the Latin America debt crisis of the early 1980s, the banks retained the money to help rebuild their balance sheets, he recalls. "In this case they're going to pay out 40% [of profits] - that's not good economic policy."
http://tinyurl.com/yap7k25
Wonder who else they screwed?
Goldman Admits To Frontrunning Clients Through Its Prop Desk
The topic of Goldman frontrunning clients using its prop desk, which has long bothered Zero Hedge, and which in the past received Goldman's vehement refutation, seems to have resurfaced, and to have proven our initial speculations correct. Jane Lattin, assistant to Thomas Mazarakis, head of fundamental strategies, sent out an email to clients earlier, notifying them that the firm in the past has traded ahead of them in its Fundamental Strategies Group, aka its Prop Trading desk, which is, by definition, frontrunning: "The Fundamental Strategies Group is a group of cross-capital structure desk analysts employed by our Securities Divisions to assist our traders. They develop Trading Ideas in conjunction with traders. We may trade, and may have existing positions, based on Trading Ideas before we have discussed those Trading Ideas with you. We may continue to act on Trading Ideas, and may trade out of any position, based on Trading Ideas, at any time after we have discussed them with you. We will also discuss Trading Ideas with other clients, both before and after we have discussed them with you." This answers our repeated queries from July as to whether Goldman is legally front-running its clients for its own prop positions.
http://tinyurl.com/yc7w3mp
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