- The Big Picture - http://www.ritholtz.com/blog -

Final Thoughts on GS Controversy

Posted By Barry Ritholtz On March 15, 2012 @ 10:30 am In Corporate Management,Derivatives,Media | Comments Disabled

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 . . .


Article printed from The Big Picture: http://www.ritholtz.com/blog

URL to article: http://www.ritholtz.com/blog/2012/03/final-thoughts-on-gs-controversy/

Copyright © 2008 The Big Picture. All rights reserved.