24/7 Wall St.
10-28-2008, 08:26 AM
24/7 Wall St. Daily News
http://www.247wallst.com/images/2008/10/28/goldman_sachs_logo.gif (http://247wallstreet.typepad.com/.shared/image.html?/photos/uncategorized/2008/10/28/goldman_sachs_logo.gif) Sometimes there is just lunacy written about financial companies, and sometimes there is lunacy inside of financial companies. Forget about the argument that there are usually both for a minute. Yesterday we covered an issue from Financial Times after they wrote an article over the weekend and this issue may not go away about Goldman Sachs Group (NYSE: GS) CEO Lloyd Blankfein placing a call to Vikram Padit at Citigroup (NYSE: C). The topic: merger.
First and foremost, this was before the bailout package was inked and it was at the height of the woes in the sector when both Goldman Sachs and Morgan Stanley (NYSE: MS) had changed their charters to become bank holding companies. But this proposition just seems almost unbelievable. We don't think that the FT's coverage of this is wrong, but the notion that even one of these companies would consider such a call brings up a significant problem for the most prestigious investment banking firm on Wall Street.
This would have been a Citi buyout of Goldman Sachs based upon financial values at the time. It would have also been the risky company taking out one of the more prized companies. In dire times when there are only questions and no answers, this would put that "too big to fail" argument front and center. The overlaps here would so numerous that in many cases the firm could have decided which team members could run the Department of Redundancy Department.
With all the conspiracy theories that get floated on blogs and websites about Hank Paulson designing everything to the direct benefit of his former form (yep, Goldman Sachs), the notion of a Goldman-Citi tie up should perhaps be no big surprise. But it is just silly.
We have pointed out how Goldman Sachs' hay day and immunity seems to be over for the time being. But this shows the outright fear that must have been going through the financial market executive heads and it reminds me of some ominous instant messages being passed around the brokerage community before even Bear Stearns had imploded. There were many IM's in conversations from December to February in the brokerage community that said "Wall Street is Bankrupt." Some of these were speculative and some were "second hand comments from executives" if you trust such notions.
We have already stood on the edge of the financial abyss twice. The sad part is that we might get to stand on that edge again if the latest package fails to save the system and the players. But on thinking of a combined Citi-Goldman, then the players pulling the puppet strings have to believe that the game is pure fiction.
Part of the entire move to become a bank holding company requires that less leverage is employed. Goldman Sachs has a history of making great bets, while Citi does not. If Goldman Sachs wants to instill some confidence it should go out and take a more serious look at some of the healthier banks out there. Northern Trust (NASDAQ: NTRS) has long been thought of as the crown jewel in banking and wealth management. There are many depository institutions which Goldman Sachs could gobble up if it chose to. US Bancorp (NYSE: USB) would essentially be a mouthful right now, and SunTrust Banks Inc. (NYSE: STI) is another possibility.
Which institutions Goldman Sachs ends up going after is an unknown. It is very likely that its strategy comes in a form which few would have envisioned. But the mere notion of the firm calling Citigroup about a possible deal just starts to ooze questions of management's faith in its own ability to navigate the treacherous waters which many of us feel are ahead (bailout or no bailout).
This makes one wonder if the current management at Goldman Sachs is going to be able to have many competitive advantages going forward.
Jon C. Ogg
October 28, 2008
http://feeds.feedburner.com/~f/typepad/RyNm?i=uRsrM</img> (http://feeds.feedburner.com/~f/typepad/RyNm?a=uRsrM) http://feeds.feedburner.com/~f/typepad/RyNm?i=9lfLM</img> (http://feeds.feedburner.com/~f/typepad/RyNm?a=9lfLM) http://feeds.feedburner.com/~f/typepad/RyNm?i=gVkom</img> (http://feeds.feedburner.com/~f/typepad/RyNm?a=gVkom)
complete story here... (http://www.247wallst.com/2008/10/is-goldman-sach.html)
http://www.247wallst.com/images/2008/10/28/goldman_sachs_logo.gif (http://247wallstreet.typepad.com/.shared/image.html?/photos/uncategorized/2008/10/28/goldman_sachs_logo.gif) Sometimes there is just lunacy written about financial companies, and sometimes there is lunacy inside of financial companies. Forget about the argument that there are usually both for a minute. Yesterday we covered an issue from Financial Times after they wrote an article over the weekend and this issue may not go away about Goldman Sachs Group (NYSE: GS) CEO Lloyd Blankfein placing a call to Vikram Padit at Citigroup (NYSE: C). The topic: merger.
First and foremost, this was before the bailout package was inked and it was at the height of the woes in the sector when both Goldman Sachs and Morgan Stanley (NYSE: MS) had changed their charters to become bank holding companies. But this proposition just seems almost unbelievable. We don't think that the FT's coverage of this is wrong, but the notion that even one of these companies would consider such a call brings up a significant problem for the most prestigious investment banking firm on Wall Street.
This would have been a Citi buyout of Goldman Sachs based upon financial values at the time. It would have also been the risky company taking out one of the more prized companies. In dire times when there are only questions and no answers, this would put that "too big to fail" argument front and center. The overlaps here would so numerous that in many cases the firm could have decided which team members could run the Department of Redundancy Department.
With all the conspiracy theories that get floated on blogs and websites about Hank Paulson designing everything to the direct benefit of his former form (yep, Goldman Sachs), the notion of a Goldman-Citi tie up should perhaps be no big surprise. But it is just silly.
We have pointed out how Goldman Sachs' hay day and immunity seems to be over for the time being. But this shows the outright fear that must have been going through the financial market executive heads and it reminds me of some ominous instant messages being passed around the brokerage community before even Bear Stearns had imploded. There were many IM's in conversations from December to February in the brokerage community that said "Wall Street is Bankrupt." Some of these were speculative and some were "second hand comments from executives" if you trust such notions.
We have already stood on the edge of the financial abyss twice. The sad part is that we might get to stand on that edge again if the latest package fails to save the system and the players. But on thinking of a combined Citi-Goldman, then the players pulling the puppet strings have to believe that the game is pure fiction.
Part of the entire move to become a bank holding company requires that less leverage is employed. Goldman Sachs has a history of making great bets, while Citi does not. If Goldman Sachs wants to instill some confidence it should go out and take a more serious look at some of the healthier banks out there. Northern Trust (NASDAQ: NTRS) has long been thought of as the crown jewel in banking and wealth management. There are many depository institutions which Goldman Sachs could gobble up if it chose to. US Bancorp (NYSE: USB) would essentially be a mouthful right now, and SunTrust Banks Inc. (NYSE: STI) is another possibility.
Which institutions Goldman Sachs ends up going after is an unknown. It is very likely that its strategy comes in a form which few would have envisioned. But the mere notion of the firm calling Citigroup about a possible deal just starts to ooze questions of management's faith in its own ability to navigate the treacherous waters which many of us feel are ahead (bailout or no bailout).
This makes one wonder if the current management at Goldman Sachs is going to be able to have many competitive advantages going forward.
Jon C. Ogg
October 28, 2008
http://feeds.feedburner.com/~f/typepad/RyNm?i=uRsrM</img> (http://feeds.feedburner.com/~f/typepad/RyNm?a=uRsrM) http://feeds.feedburner.com/~f/typepad/RyNm?i=9lfLM</img> (http://feeds.feedburner.com/~f/typepad/RyNm?a=9lfLM) http://feeds.feedburner.com/~f/typepad/RyNm?i=gVkom</img> (http://feeds.feedburner.com/~f/typepad/RyNm?a=gVkom)
complete story here... (http://www.247wallst.com/2008/10/is-goldman-sach.html)