XOM
02-04-2009, 02:21 PM
Feb. 4 (Bloomberg) -- Goldman Sachs Group Inc. wants to repay the $10 billion it got from the U.S. Treasury last year to signal the firm is healthy and to escape limitations that were imposed with the money, Chief Financial Officer David Viniar said.
“Operating our business without the government capital would be an easier thing to do,” Viniar said today at a conference hosted by Credit Suisse Group AG in Naples, Florida. “We’d be under less scrutiny and under less pressure.” He added, “It would send a very good signal” if the firm could repay the money.
Under current rules, Goldman and other firms that received money under the Troubled Asset Relief Program, or TARP, are required to raise common or preferred equity to replace the government funds, Viniar said. The company, which received the government money in October, will consider raising money “if the markets are good,” he said.
“It’s not really restricting the way we do business but it was not meant to be permanent capital,” Viniar said. “There are pretty minor, at this point, executive compensation restrictions and we’d like to get out from under those,” he said.
Obama’s Plan
Compensation limits unveiled by President Barack Obama only affect companies that receive exceptional aid from the government in the future and won’t apply to companies such as Goldman that have already received money. Goldman Sachs’s top seven executives didn’t take any bonuses for 2008. The firm paid out $10.9 billion in compensation for 2008, down 46 percent from a record $20.2 billion in 2007.
The government investment also limits the firm’s ability to raise dividends and to repurchase stock, except for repurchases of stock that’s granted to employees as compensation, Viniar added.
“So there are capital structure restrictions on having the TARP, we would like to get out from under those so that we can do what we think is correct,” he said.
“We would only do it if we did it in conjuction with the Fed and the Treasury and with their blessing and with their desire,” Viniar said, of plans to repay the government. “We would like to do it and we would like to do it as soon as we can and it will just take a little while.”
Goldman will also be “very cautious” about considering any acquisitions because there’s a longer record of unsuccessful deals in the financial services industry than successful ones, Viniar said. He said the firm is likely to maintain its current business of focusing on corporate and institutional clients rather than entering the retail business.
“I would not pick up the Wall Street Journal every morning looking for the big Goldman Sachs acquisition because I think you will be disappointed,” he said. “We don’t really like or know the retail business and I don’t expect that to change too much.”
I think this might indicate that Goldman smells a bottom in the markets and knows it can't capitalize on it with the restraints being placed upon it whilst still under govt scrutiny. Of course it could also mean that they want to short the financials into oblivion and don't want to risk the backlash on that anymore than is necessary
“Operating our business without the government capital would be an easier thing to do,” Viniar said today at a conference hosted by Credit Suisse Group AG in Naples, Florida. “We’d be under less scrutiny and under less pressure.” He added, “It would send a very good signal” if the firm could repay the money.
Under current rules, Goldman and other firms that received money under the Troubled Asset Relief Program, or TARP, are required to raise common or preferred equity to replace the government funds, Viniar said. The company, which received the government money in October, will consider raising money “if the markets are good,” he said.
“It’s not really restricting the way we do business but it was not meant to be permanent capital,” Viniar said. “There are pretty minor, at this point, executive compensation restrictions and we’d like to get out from under those,” he said.
Obama’s Plan
Compensation limits unveiled by President Barack Obama only affect companies that receive exceptional aid from the government in the future and won’t apply to companies such as Goldman that have already received money. Goldman Sachs’s top seven executives didn’t take any bonuses for 2008. The firm paid out $10.9 billion in compensation for 2008, down 46 percent from a record $20.2 billion in 2007.
The government investment also limits the firm’s ability to raise dividends and to repurchase stock, except for repurchases of stock that’s granted to employees as compensation, Viniar added.
“So there are capital structure restrictions on having the TARP, we would like to get out from under those so that we can do what we think is correct,” he said.
“We would only do it if we did it in conjuction with the Fed and the Treasury and with their blessing and with their desire,” Viniar said, of plans to repay the government. “We would like to do it and we would like to do it as soon as we can and it will just take a little while.”
Goldman will also be “very cautious” about considering any acquisitions because there’s a longer record of unsuccessful deals in the financial services industry than successful ones, Viniar said. He said the firm is likely to maintain its current business of focusing on corporate and institutional clients rather than entering the retail business.
“I would not pick up the Wall Street Journal every morning looking for the big Goldman Sachs acquisition because I think you will be disappointed,” he said. “We don’t really like or know the retail business and I don’t expect that to change too much.”
I think this might indicate that Goldman smells a bottom in the markets and knows it can't capitalize on it with the restraints being placed upon it whilst still under govt scrutiny. Of course it could also mean that they want to short the financials into oblivion and don't want to risk the backlash on that anymore than is necessary