Goldman begins layoffs [SIZE="1"]It is cutting 10% of staff [/SIZE][SIZE="1"]The job cuts, which were first reported last month, are a reflection of the ongoing downturn in the credit and lending markets that triggered massive losses for banks around the world. -- PHOTO: ASSOCIATED PRESS[/SIZE]NEW YORK - GOLDMAN Sachs Group has begun notifying about 3,200 employees globally that they have lost their jobs, as the world's biggest investment bank slashes expenses to ride out the financial crisis, a person familiar with the situation said on Wednesday. The job cuts, which were first reported last month, are a reflection of the ongoing downturn in the credit and lending markets that triggered massive losses for banks around the world. Goldman Sachs had been considered the strongest investment bank on Wall Street, and earlier this year had expected its payrolls to expand. Positions will be cut across Goldman's offices globally and among various business lines, and will bring the company's staffing to 2006 and 2007 levels, the person said. He spoke on condition of anonymity because the company hasn't publicly disclosed details of the plan. According to CapitalIQ, Goldman has more than 37,000 employees across its operations. There also have been reports that Goldman's army of bankers might see their bonuses cut in half this year. Difficulties at the firm demonstrate that even the industry's most powerful player is not immune to fallout from the unprecedented financial turmoil. On Monday, Merrill Lynch analyst Guy Moszkowski predicted that Goldman would report a loss for the fourth quarter - its first since going public in 1999. The stock market's plunge has created a brutal atmosphere for some of Goldman's once high-flying businesses, such as private equity and proprietary trading. During its fiscal third quarter, which ended Aug 31, the company's profit fell 71 per cent, but that performance was still better than many of its competitors, which have reported quarterly losses throughout much of the year. But, September was considered one of the worst months during the credit crisis as banks essentially stopped lending money to each other for fear loans would not be repaid. Problems intensified when Lehman filed for bankruptcy and the government loaned insurer American International Group US$85 billion (S$126 billion) to help it remain in business. 'The short-term outlook for the company is poor,' said Mr Richard X. Bove, an analyst with Ladenburg Thalmann. 'I have had a 'Sell' recommendation on this stock most of the past few years'. 'The reason is that the market did not seem to understand the risks in this company. Those risks are now being made clear.' Last month, as Merrill Lynch hastily sold itself to Bank of America, Goldman and fellow independent investment bank Morgan Stanley received approval to become bank holding companies. Former rival Bear Stearns was snapped up at a steep discount by JPMorgan Chase in March. Goldman and Morgan Stanley made the change to bank holding companies as investors worried the stand-alone investment bank model may no longer be viable. The new status allows Goldman to grow a large deposit base to help fund its operations, while providing permanent access to borrow money from the Federal Reserve. Before changing its status, Goldman only had temporary access to that lending option. But it also opens Goldman up to increased regulatory scrutiny, which could force it to scale back some of its more leveraged and aggressive business units. Goldman also struck a deal with billionaire investor Warren Buffett to sell preferred and common stock to Mr Buffett's Berkshire Hathaway As part of the deal, Mr Buffett planned to invest at least US$5 billion in fresh capital to help Goldman and could double that investment to $10 billion. At the same time, Goldman issued common stock to raise an additional US$5 billion through a public offering. Shares of Goldman fell US$7.57, or 7.8 per cent, to close earlier at US$87.43. A year ago, the stock traded at a 52-week high of US$240.05. -- APSource: http://www.straitstimes.com/Breaking%2BNews/Money/Story/STIStory_299026.html
A trickle of banks, large and small, are lining up to repay the government's bailout money.On Tuesday, Goldman Sachs (GS) raised $5 billion by selling more than 40 million shares for $123 apiece.SORTABLE LIST: Recipients of bailout fundsTo cheers from lawmakers, the New York investment bank said it would use the money to pay back the $10 billion the government gave it at the height of the financial crisis last October as part of the Treasury's Troubled Asset Relief Program, or TARP."Goldman Sachs' announcement … is welcome news for those of us who support an exit strategy from government intervention in the marketplace," says Rep. Spencer Bachus of Alabama, the top Republican on the Financial Services Committee.Goldman would be the largest, if it follows six smaller banks, including Signature Bank (SBNY) and IberiaBank, (IBKC) who have already repaid the government with interest.But analysts are cautioning that the repayments should not be viewed as an indication that the economy is rebounding; rather as a sign of how worried bankers are about legislation that imposes limits on banks that take TARP money."Treasury shouldn't allow any of the larger banks to pay the money back until it is absolutely certain that the financial crisis is over and that each of them can raise money on their own," says Richard Bove, an analyst at Rochdale Research.Treasury spokesman Andrew Williams says it isn't discouraging banks from repaying TARP funds as long as that doesn't jeopardize how they function. "Treasury does not want the repayment to hinder the ability of financial institutions to continue lending."For smaller banks, the repayments are a way to showcase their strength during a recession.Still they say they were pushed by changes in The American Recovery and Reinvestment Act, which imposes limits on pay and bonuses and places restrictions on hiring foreign nationals and training programs.For instance, New York-based Signature Bank CEO Joseph DePaolo said the restrictions would make it difficult to recruit and retain "highly talented banking professionals throughout the metropolitan New York area."John Fahey at Centra Financial, says his bank's payroll for 248 employees is $14 million, so he wasn't worried about compensation. "But when the government tries to tell you how to run employee training or rescind job offers, it's cumbersome," he says.
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(Reuters) - Goldman Sachs Group Inc was charged with fraud by the U.S. Securities and Exchange Commission over its marketing of a debt product tied to subprime mortgages that was designed to fail.U.S.The lawsuit is the biggest crisis in years for Goldman, which emerged from the global financial crisis as Wall Street's most influential bank.It is also a huge test for Chief Executive Lloyd Blankfein, who has faced a firestorm of criticism over the bank's pay and business practices. It comes as lawmakers in Washington debate sweeping reform of financial industry regulation.Goldman shares fell as much as 15.6 percent and broader stock markets fell after the news.The SEC alleged that Paulson & Co, a major hedge fund run by billionaire John Paulson, worked with Goldman in creating a collateralized debt obligation, and stood to benefit as its value fell, costing investors more than $1 billion. That is roughly the amount that Paulson is estimated to have made by betting against the CDO.Fabrice Tourre, a Goldman vice president who the SEC said was principally responsible for creating the product, was also charged with fraud. Paulson was not charged."The SEC has come out swinging," said Cary Leahey, senior managing director of Decision Economics in New York. "This will be a difficult case to prove. Even supposed experts on Wall Street with years of experience in this area are still scratching their heads trying to figure out who did what."GOLDMAN DEFENDS ITSELFGoldman vowed to fight the SEC civil suit."The SEC's charges are completely unfounded in law and fact and we will vigorously contest them and defend the firm and its reputation," it said.Paulson and Tourre were not immediately available for comment.It is a regulatory and public relations nightmare for Blankfein, who has spent 18 months fending off complaints that Goldman is an unfair beneficiary of taxpayer bailouts of Wall Street. He became CEO less than a year before the product challenged by the SEC was created."This could be the beginning of a period where you have a regulatory cloud over Goldman Sachs, and perhaps even the entire investment banking industry," said Hank Smith, chief investment officer at Haverford Trust Co in Philadelphia.The lawsuit represents an aggressive expansion of regulatory efforts to hold people and companies responsible for activity that contributed to the nation's financial crises.Other investigations may in the offing.Janet Tavakoli, president of Tavakoli Structured Finance Inc in Chicago and author of a book on synthetic CDOs, said it may have been quite common on Wall Street for hedge funds to play major roles in picking mortgage-backed securities to be put into portfolios used in CDO transactions."Many investors were not aware of how disadvantaged they were by these CDO structures," she said.Robert Khuzami, head of the SEC's enforcement division, said John Paulson was not charged because it was Goldman that made misrepresentations to investors, not him.It is unlikely that criminal charges will be brought, a source close to the matter said. Representatives for the Justice Department declined to comment.In afternoon trading, Goldman shares sank $24.92, or 13.5 percent, to $159.35 on the New York Stock Exchange, after earlier falling to $155.57.The news sent broader U.S. stock indexes down more than 1 percent, and major bank indexes down more than 3 percent.E-MAIL TRAILIn its lawsuit, the SEC alleged that Goldman structured and marketed a synthetic CDO, ABACUS, that hinged on the performance of subprime residential mortgage-backed securities.It alleged that Goldman did not tell investors "vital information" about ABACUS, including that Paulson & Co was involved in choosing which securities would be part of the portfolio. It also alleged that Paulson took a short position against the CDO in a bet that its value would fall.According to the SEC, the marketing materials for the CDO showed that a third party, ACA Management LLC, chose the securities underlying the CDO, without revealing Paulson's involvement.The complaint quotes extensively from internal emails and memos, noting that in early 2007 it had become difficult to market CDOs tied to mortgage-backed securities.For example, the complaint quotes a January 23, 2007, email from a friend to Tourre, sent in English and French and translated by the SEC, as saying: "The whole building is about to collapse anytime now ... Only potential survivor, the fabulous Fab ... standing in the middle of all these complex, highly leveraged, exotic trades he created without necessarily understanding all of the implications of these monstrosities!!!"Another email to Tourre from the head of Goldman's structured product correlation trading desk complained: "The cdo biz is dead we don't have a lot of time left."Other communications detail the importance of hiring ACA for independent portfolio selection. "We expect the strong brand-name of ACA as well as our market-leading position in synthetic CDOs of structured products to result in a successful offering," a March 12 e-mail said.Paulson & Co paid Goldman $15 million to structure and market the ABACUS CDO, which closed on April 26, 2007, the SEC said. Little more than nine months later, 99 percent of the portfolio had been downgraded, the SEC said."In sum," the complaint said, "Goldman Sachs arranged a transaction at Paulson's request in which Paulson heavily influenced the selection of the portfolio to suit its economic interests, but failed to disclose to investors ... Paulson's role in the portfolio selection process or its adverse economic interests."IMPACTThe SEC charges are expected to fuel anti-Wall Street sentiment on Capitol Hill, where sweeping financial industry reforms are expected to soon arrive on the Senate floor for a vote.A Democratic bill, strongly supported by President Barack Obama, would slap new restraints on major banks, likely curtailing their opportunities for profit and revenue growth.Similar legislation was approved in the House of Representatives in December. Analysts believe a bill could be signed into law by Obama by mid-year.The SEC lawsuit was assigned to U.S. District Judge Barbara Jones, who was appointed to the bench by President Bill Clinton. She presided over the 2005 criminal trial of former WorldCom Inc Chief Executive Bernard Ebbers over an $11 billion accounting fraud at the phone company.The case is SEC v. Goldman Sachs & Co et al, U.S. District Court, Southern District of New York, No. 10-03229.(Reporting by Maria Aspan, Clare Baldwin, Jeffrey Cane, Elinor Comlay, Kevin Drawbaugh, Steve Eder, David Gaffen, Matt Goldstein, Herb Lash, Ed Krudy, Grant McCool, Jeremy Pelofsky, Aaron Pressman, Leah Schnurr, Jonathan Spicer, Jonathan Stempel, Caroline Valetkevitch, Phil Wahba, Dan Wilchins, Karey Wutkowski and Rachelle Younglai; Editing by Robert MacMillan and John Wallace) http://www.reuters.com/article/idUSTRE63F3JX20100416
(For more stories on the Goldman case, see {EXT2 <GO>}.)By Robert Hutton and Tony CzuczkaApril 18 (Bloomberg) -- Britain joined Germany in calling for a probe of Goldman Sachs Group Inc. after the U.S. Securities and Exchange Commission said it was suing the company for fraud.U.K. Prime Minister Gordon Brown said he wants the Financial Services Authority open an inquiry, declaring he was “shocked” at “moral bankruptcy” indicated in the suit. The German financial regulator, Bafin, asked the SEC for details on the suit, a spokesman for Chancellor Angela Merkel said.“This is probably one of the worst cases we’ve seen,” Brown said on the BBC’s Andrew Marr program in London today. “It looks as if people were misled about what happened. The banks are still an issue. They are a risk to the economy.”The investigations widen the threat to the New York-based bank, which on April 16 denied wrongdoing. The U.S. regulator accused Goldman Sachs of fraud tied to collateralized debt obligations that contributed to the financial crisis.Royal Bank of Scotland Group Plc, mostly owned by the U.K. government, paid $841 million to Goldman Sachs to unwind its position in the Abacus security, which it inherited when it bought ABN Amro in 2007, according to the SEC filing.The SEC also cited Dusseldorf-based IKB Deutsche Industriebank AG as a purchaser of part of the CDO at issue. In 2008, Germany’s state-owned KfW development bank pumped almost 10 billion euros ($13.5 billion) into IKB to shore up the German banking system.The German government “will ask the SEC for information,” said Ulrich Wilhelm, a spokesman for Merkel. “Then we will look at the records and consider possible legal steps.”It’s too early to say whether any legal action will relate to IKB, Wilhelm said. “First we have to ask for information,” he said.--With additional assistance from Kevin Crowley in London. Editors: Reed Landberg, Andrew Atkinson
80.190.132.35 IP address location & more:IP address [?]: 80.190.132.35 [Whois] [Reverse IP]IP country code: DEIP address country: GermanyIP address state: HessenIP address city: Frankfurt Am MainIP address latitude: 50.1167IP address longitude: 8.6833ISP of this IP [?]: IP Exchange GmbHOrganization: Erames GmbHHost of this IP: [?]: es1.metafeed.de [Whois] [Trace]Local time in Germany: 2010-09-14 02:45
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