I just did a phoner on Bloomberg TV on Goldie, and I suspect this meme has just about run its viral course.
To me, the key takeaways are as follows:
• Publicly Traded Banks: When firms shifted from Partnerships to publicly traded banks, their priorities changed.
• Profits First: Meeting quarterly profit estimates became job 1; everything else, including the corporate culture, was secondary.
• Not Just Goldman: GS may have lost $3b in cap yesterday, but I doubt they will lose many clients. Where are they going to go, to the choirboys who work at Morgan Stanley, or to the philanthropic organization known as Deutsche Bank?
• Derivatives are Opaque: The issue with complex products is lack of transparency. Derivative fees are opaque, the products are complex, and muppets clients do not understand how much margin is built in.
• Counter-Party vs Fiduciary: The complexity of these products often leads to clients relying on their salesman. They shouldn’t — they are not your adviser, they are your counterparty.
This is the last I plan on discussing this topic for the foreseeable future . . .
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