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Greg Smith says Goldman’s response confirms his criticisms: Q&A
Lauren Tara LaCapra
Oct 22, 2012 16:13 UTC
clients | conflicts of interest | ethics | Goldman Sachs | greg smith | Lloyd Blankfein | ping pong | wall street
Greg Smith, the ex-Goldman Sachs salesman who stunned the investment bank with a scathing public resignation in March, is now on the defense.
Smith, whose book, “Why I Left Goldman Sachs” hits bookstores today, has been facing the wrath of Goldman, media critics, and online commenters since last week, when bits and pieces of his book began to leak out and Goldman quickly jumped at the chance to characterize him as an undistinguished ex-employee with an ax to grind.
Goldman said Smith quit because he didn’t get the raise or position he wanted. It has also tried to cast doubt on the veracity of his claims by making other current and ex-Goldman employees available for media interviews to dispute Smith’s characterization of events in his book anecdotes.
Smith, a 33-year-old South Africa native and ping-pong champion​, has also gotten some criticism from those who have read the book and found his story too naïve, too silly or, in some cases, too dishonest to be taken seriously.
Smith spoke with Reuters’ South Africa correspondent, David Dolan, about why he wrote the book, and responded to some criticisms from Goldman and the chattering class. He said he has received over 4,000 messages of support through email, Facebook and elsewhere since taking his concerns public in a New York Times op-ed. (Not to add another volley to this PR ping-pong game, but, in response to Smith’s response to their response, Goldman said his claims are not specific enough to investigate and that he did not respond to their repeated efforts to contact him.)
Some additional comments Smith made to Dolan can be found below, edited for clarity and space:
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Wall Street pay: Headed up or down?
Lauren Tara LaCapra
Oct 19, 2012 20:18 UTC
compensation | earnings | goldman | Goldman Sachs | morgan stanley | pay | profits | wall street
It was a good third quarter for Wall Street profits and an even better one for employees: Goldman Sachs and Morgan Stanley set aside another $7.6 billion in compensation during the period, with year-to-date pay for the average employee up 15 percent at Goldman and 3 percent at Morgan Stanley.
Total comp accruals for both firms so far this year are up to $23 billion, 2 percent higher than the amount set aside a year ago. That equates to or 47 percent of adjusted net revenue, down from 50 percent for the first nine months of 2011, but still much higher than the pay levels some shareholders are demanding.
The data are a little befuddling, since New York State Comptroller Thomas DiNapoli recently said he expects Wall Street to lose jobs this year, and for pay to drop. Recruiters and Wall Street pay consultants have also said they expect pay to either decline or remain relatively flat for many kinds of traders and bankers this year. And JPMorgan’s investment bank has already started chopping down banker pay.
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Some Hedge Funds Throwing in Keys as “Landlords”
Matthew Goldstein
Oct 18, 2012 17:13 UTC
flippers | foreclosed homes | gold rush | hedge funds | housing crisis | one percent | private equity | rent to own | wall street
By Matthew Goldstein and Jennifer Ablan
All year the big money has been talking up one of the more intriguing trades to emerge from the housing crisis: buying up foreclosed homes in large scale and rent those out for several years and then unload them when the price is right. But questions about the so-called rent-to-own trade are being raised now that an early mover in the space, hedge fund giant Och-Ziff Capital, is looking to cash in its chips now and is abandoning the idea of operating foreclosed homes as rental properties for years to come.
Now we’re not quite ready to declare the foreclosed home rent-to-own trade is dead as the tireless, prolific financial bloggers at ZeroHedge did in a good riff on our exclusive story on Och-Ziff’s decision. But Daniel Och’s concern that the income to be generated from renting out foreclosed homes may not be as high as originally anticipated bears close scrutiny because it could spell trouble for other hedge funds, private equity firms and smaller money managers counting on rental income to generate an annual 8 pct or greater return on investment.
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UF Weekend Reads
Matthew Goldstein
Oct 12, 2012 21:42 UTC
@samuelforgione | debates | fiscal cliff | foreclosures | hedge funds | hopefully | no more debates | volatility | wall street
By Sam Forgione
This week’s Weekend Reads may drive you back to the big news of the week: The Debates.
Just as the candidates’ tone and tenor seemed to drive judgments as to who won and lost, some stories were written about sparring between politicians and bankers, billionaires on whether a bankrupt Mexican company should be let off the hook, the banks and the foreclosed-upon, and the more milder subject of volatility investing. In the case of the Foreign Policy and DealBook links, the attitudes of the parties involved seem more important than their logic. And a winner and a loser probably won’t come to you. At least here, unlike in the voting booths, you can stay undecided.
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UF Weekend Reads
Matthew Goldstein
Oct 5, 2012 21:19 UTC
dimon | dollars | jpmorgan | london whale | noise | politics
Fall really arrives in NYC this weekend. What better time then for Sam Forgione’s weekend reads. Have a whale of a time.
From The New York Times:
Susan Dominus long read about Ina Drew, the “natural” risk manager, who oversaw JP Morgan’s $6 billion trading loss.
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Hedge funds love affair with leverage still on hiatus, for now
Katya Wachtel
Oct 5, 2012 20:37 UTC
abs | CDO | clos | embedded leverage | financial crisis | funds | hedge funds | leverage | returns | S&P | structured credit | yield
By Katya Wachtel
Last year was a sorry one for the $2 trillion hedge fund industry, when funds lost 5 percent on average. This year managers are doing better, up more than 5 percent for the year, according to the latest tracking data.
But those returns are a far cry from the 16.4 percent rise achieved by the S&P 500 this year, so what will hedge fund managers – who are supposed to be the smartest, savviest market players on the Street – do to juice returns?
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Former stock market ‘scalpers’ are vocal HFT critics
Emily Flitter
Oct 3, 2012 14:01 UTC
@FlitterOnFraud | high frequency trading | stock market | traders
By Emily Flitter
While the Securities and Exchange Commission maintains it does not need to do much to reign in the high frequency trading machines that have taken over Wall Street, a group of traders who understand how HFT firms make money—because it’s similar to the method they used to use themselves—have become vocal HFT critics. Yes, they may complain because they don’t make as much money as they used to, but they also think the machines are destabilizing the market.
Meet Dennis Dick, a prop trader in Detroit and a member of a league of stock market participants who have had to change their trading strategies now that they are no longer the fastest guns on the Street.
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Gundlach doesn’t whine over his stolen wine
Jennifer Ablan
Sep 20, 2012 22:24 UTC
Bill Gross | Bond King | cars | derivatives | DoubleLine | Gundlach | LA Law | paintings | pimco | Santa Monica | Wine
By Jennifer Ablan and Matthew Goldstein
Who said bonds are boring? In recent days, Jeffrey Gundlach, the new king of the fixed-income world, has been dominating headlines with his lengthy CNBC interview on everything from counterparty risk to the market’s love affair with Apple stock to talk in the blogosphere about Gundlach’s pricey Santa Monica, Calif. residence being burglarized of more than $10 million in assets.
Against this backdrop, Gundlach’s firm, DoubleLine, hit a huge milestone this week as well, hitting $45 billion in assets under management.
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The new Goldman way: Less cushy compensation?
Lauren Tara LaCapra
Sep 19, 2012 21:03 UTC
banks | compensation | finance | financials | Goldman Sachs | return on equity | ROE | shareholders | tangible book value | wall street
By Lauren Tara LaCapra
On a conference call to discuss Goldman Sachs’ new chief financial officer yesterday, an analyst asked departing CFO David Viniar why he was leaving when the stock is at a historic low.
Viniar avoided the question by joking that his successor, Harvey Schwartz, would trump that performance. But some investors think they have a better way to fix Goldman’s stock slump: cut back further on comp.
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UF Weekend Reads
Matthew Goldstein
Sep 14, 2012 20:24 UTC
ask tougher questions | Bernanke | eminent domain | housing | jobs | jobs jobs jobs | MBS | mortgages | principal redutions | Uncle Ben
So it appears Uncle Ben a/k/a Fed Reserve Chairman Ben Bernanke finally gets it:  to fix the U.S. economy, you need to fix housing. The trouble is the Fed’s remedy of buying $40 billion worth of mortgage backed securities each month may  not do the trick.
Bernanke argues that buying MBS will push mortgage rates even lower–something that will spur loan refinancings and make it easier for people to buy a home. He believes a rush of new home buying will spur home construction and create job, jobs, jobs.
It sounds good. But the problem is the housing market is not suffering from high interest rates. With the 30-year mortgage rate already down to around 3.65 %, it’s not interest rates that’s keeping the housing market from taking off. Two years after the recession officially ended, far too many homeowners are still weighed down by debt–especially mortgage debt.
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