Goldman, Morgan Stanley Become Bank Holding Companies

[heyheybooboo]

Goldman, Morgan Stanley Become Bank Holding Companies
Sunday, Sept. 21

By becoming bank holding companies, Morgan Stanley and Goldman will come under the scrutiny of national banking regulators and will be subject to new capital requirements, The Wall Street Journal noted.

In order to provide increased liquidity to Goldman and Morgan Stanley while they make the transition to a new structure, the Fed said it would extend credit to the two firms' broker-dealer subsidiaries against a wide range of collateral.

In addition, the Fed will make such credit available to Merrill Lynch.

The Fed's decision allows Morgan Stanley and Goldman to set up commercial bank subsidiaries to take deposits, and gives them the same access as other commercial banks to the Fed's emergency loan program.

Giant Investment Banks Grasp for Government Safety Net
September 22, 2008

The move, approved by the Fed with unusual haste, gives Goldman Sachs and Morgan Stanley greater latitude to borrow from the Fed and access to stable sources of funding -- namely, deposits from ordinary people and businesses. But the firms are also accepting regulation by the Fed that will make it far more expensive for them to borrow huge sums of money -- long an essential ingredient in their investment strategy -- and restrict what sorts of business activities they can engage in....

As bank holding companies, Goldman and Morgan will be forced to put more money on the table when they make investment bets. Goldman Sachs, for example, currently holds about $1 for every $22 in investments. Morgan Stanley's ratio is even more dramatic. By contrast, Bank of America, which will soon be the nation's largest bank holding company, holds about $1 for every $11 in investments.....

Currently, the Fed has about a half-dozen examiners in Goldman and Morgan combined.

So. ""The Fed said it would extend credit to the two firms' broker-dealer subsidiaries against a wide range of collateral"" and Hank Paulson will soon have his $700 Billion Golden Bucket of Taxpayer Cash to ease the transition into bank holding companies.

And you thought this was about 'the mortgage crisis on main street'. Goldman and Morgan debt instruments were trading as junk in March of 2007. Credit-default swaps on the debt of Goldman have tripled in price since then --- and just so happen to have dropped in price 10% today on news of their 'transition' to bank holding companies. The only revenue Goldman and Morgan can generate are withdrawal/redemption fees as people pull out their money. The golden gravy train has ended. No one will loan them cash on their junk paper (except, it seems, Hank Paulson).

Protect main street, protect our homes and pensions, but don't protect the greed of the unregulated speculators out to make a quick buck with fancy shorting algorithms and complex derivatives.

A bit of good news (too little, too late ???) .....

SEC Pushes Hedge Fund Oath in Manipulation Probe
Sept. 20

The U.S. Securities and Exchange Commission, seeking to jumpstart a hunt for suspected manipulation of financial stocks, will require hedge fund managers, brokerages and institutional investors to describe under oath their bets on the firms.

Investors with "significant'' trades in the companies' securities or credit default swaps must disclose their positions and provide "certain other information'' in written statements .....

 

[dmcowen674]

I bet Wal-Mart will get their wish granted too of becoming a bank.

Up till this point they have been told no but now how can they say no to them now that they granted GS and MS bank status?

 

[The-Noid]

Originally posted by: heyheybooboo

Giant Investment Banks Grasp for Government Safety Net
September 22, 2008

The move, approved by the Fed with unusual haste, gives Goldman Sachs and Morgan Stanley greater latitude to borrow from the Fed and access to stable sources of funding -- namely, deposits from ordinary people and businesses. But the firms are also accepting regulation by the Fed that will make it far more expensive for them to borrow huge sums of money -- long an essential ingredient in their investment strategy -- and restrict what sorts of business activities they can engage in....

As bank holding companies, Goldman and Morgan will be forced to put more money on the table when they make investment bets. Goldman Sachs, for example, currently holds about $1 for every $22 in investments. Morgan Stanley's ratio is even more dramatic. By contrast, Bank of America, which will soon be the nation's largest bank holding company, holds about $1 for every $11 in investments.....

Currently, the Fed has about a half-dozen examiners in Goldman and Morgan combined.

So. ""The Fed said it would extend credit to the two firms' broker-dealer subsidiaries against a wide range of collateral"" and Hank Paulson will soon have his $700 Billion Golden Bucket of Taxpayer Cash to ease the transition into bank holding companies.

And you thought this was about 'the mortgage crisis on main street'. Goldman and Morgan debt instruments were trading as junk in March of 2007. Credit-default swaps on the debt of Goldman have tripled in price since then --- and just so happen to have dropped in price 10% today on news of their 'transition' to bank holding companies. The only revenue Goldman and Morgan can generate are withdrawal/redemption fees as people pull out their money. The golden gravy train has ended. No one will loan them cash on their junk paper (except, it seems, Hank Paulson).

Protect main street, protect our homes and pensions, but don't protect the greed of the unregulated speculators out to make a quick buck with fancy shorting algorithms and complex derivatives.

A bit of good news (too little, too late ???) .....

SEC Pushes Hedge Fund Oath in Manipulation Probe
Sept. 20

The U.S. Securities and Exchange Commission, seeking to jumpstart a hunt for suspected manipulation of financial stocks, will require hedge fund managers, brokerages and institutional investors to describe under oath their bets on the firms.

Investors with "significant'' trades in the companies' securities or credit default swaps must disclose their positions and provide "certain other information'' in written statements .....

I guess you don't really understand junk ratings.

Goldman Sachs Credit Ratings
S&P Moody's Fitch DBRS R&I
The GS Group Inc.
Short-term debt A-1+ P-1 F1+ R-1 (middle) a-1+
Long-term debt AA- Aa3 AA- AA (low) AA
Subordinated debt A+ A1 A+ A (high) AA
Preferred securities A A2 A+ A ?

Also, the swaps market is a very very illiquid market contrary to what you hear on CNBC. What prices are you quoting for swaps, as they are between one entity and another and not on an exchange. I can call CNBC and give them the price for the CDS's on both of the firms and they will post them.

You lack basic financial system knowledge, there is the game you play on your computer then there is the real world.

 

[Vic]

There's going to be a very noticeable absence in banks' incentive to lend when the dust settles here.

 

[The-Noid]

Originally posted by: Vic
There's going to be a very noticeable absence in banks' incentive to lend when the dust settles here.

Banks, can't make money unless they lend. If you cut the Ibankers salaries enough there will be a lack of lending though.

 

[heyheybooboo]

Originally posted by: Yoxxy

Originally posted by: Vic
There's going to be a very noticeable absence in banks' incentive to lend when the dust settles here.

Banks, can't make money unless they lend. If you cut the Ibankers salaries enough there will be a lack of lending though.

You are truly a legend in your own mind.

Nice non sequitur jumping from 'Banks can't make money unless they lend' to 'cutting investment banker salaries will result in a lack of lending'.

And way to obfuscate Goldman rating on swaps - their credit swaps trade as if their debt were rated four+ levels lower than your posted rankings.

Cliffs:

Goldman can't make money 'shorting'.
Goldman holds $1 in cash for every $22 in 'investments'.
Goldman had $845 million in net income last quarter.
Goldman has $1 trillion in liabilities and $30 billion in cash.

 

[Slew Foot]

Originally posted by: Vic
There's going to be a very noticeable absence in banks' incentive to lend when the dust settles here.

Explain please.

 

[The-Noid]

Originally posted by: heyheybooboo

Originally posted by: Yoxxy

Originally posted by: Vic
There's going to be a very noticeable absence in banks' incentive to lend when the dust settles here.

Banks, can't make money unless they lend. If you cut the Ibankers salaries enough there will be a lack of lending though.

You are truly a legend in your own mind.

Nice non sequitur jumping from 'Banks can't make money unless they lend' to 'cutting investment banker salaries will result in a lack of lending'.

And way to obfuscate Goldman rating on swaps - their credit swaps trade as if their debt were rated four+ levels lower than your posted rankings.

Cliffs:

Goldman can't make money 'shorting'.
Goldman holds $1 in cash for every $22 in 'investments'.
Goldman had $845 million in net income last quarter.
Goldman has $1 trillion in liabilities and $30 billion in cash.

Who do you know that is a counterparty on the swaps that gave your pricing? I know for a fact people that have lied to CNBC, a swap is not a public contract, and CNBC is not a counterparty to any of the contracts made. It is also a simple arb strategy to short stock / long CDS when you know paulson wipes out the equity and debt holders upon takeover.
The CDS are trading more in line for a BBB+ company as of right now. My expectation is they will come back in line to higher investment grade as the CNBC CDS fear ends.
Most of Goldmans profit comes from the currency/futures trading.
22x levered is better than almost any euro bank or euro ibank.
Again they made a profit, obviously they can cover the rent on their liabilities.

 

[LegendKiller]

Originally posted by: Yoxxy

Originally posted by: heyheybooboo

Originally posted by: Yoxxy

Originally posted by: Vic
There's going to be a very noticeable absence in banks' incentive to lend when the dust settles here.

Banks, can't make money unless they lend. If you cut the Ibankers salaries enough there will be a lack of lending though.

You are truly a legend in your own mind.

Nice non sequitur jumping from 'Banks can't make money unless they lend' to 'cutting investment banker salaries will result in a lack of lending'.

And way to obfuscate Goldman rating on swaps - their credit swaps trade as if their debt were rated four+ levels lower than your posted rankings.

Cliffs:

Goldman can't make money 'shorting'.
Goldman holds $1 in cash for every $22 in 'investments'.
Goldman had $845 million in net income last quarter.
Goldman has $1 trillion in liabilities and $30 billion in cash.

Who do you know that is a counterparty on the swaps that gave your pricing? I know for a fact people that have lied to CNBC, a swap is not a public contract, and CNBC is not a counterparty to any of the contracts made. It is also a simple arb strategy to short stock / long CDS when you know paulson wipes out the equity and debt holders upon takeover.
The CDS are trading more in line for a BBB+ company as of right now. My expectation is they will come back in line to higher investment grade as the CNBC CDS fear ends.
Most of Goldmans profit comes from the currency/futures trading.
22x levered is better than almost any euro bank or euro ibank.
Again they made a profit, obviously they can cover the rent on their liabilities.

interesting how that leverage ratio has improved so quickly.

My bank has a better leverage ratio

 

[JS80]

Originally posted by: Yoxxy

Originally posted by: heyheybooboo

Originally posted by: Yoxxy

Originally posted by: Vic
There's going to be a very noticeable absence in banks' incentive to lend when the dust settles here.

Banks, can't make money unless they lend. If you cut the Ibankers salaries enough there will be a lack of lending though.

You are truly a legend in your own mind.

Nice non sequitur jumping from 'Banks can't make money unless they lend' to 'cutting investment banker salaries will result in a lack of lending'.

And way to obfuscate Goldman rating on swaps - their credit swaps trade as if their debt were rated four+ levels lower than your posted rankings.

Cliffs:

Goldman can't make money 'shorting'.
Goldman holds $1 in cash for every $22 in 'investments'.
Goldman had $845 million in net income last quarter.
Goldman has $1 trillion in liabilities and $30 billion in cash.

Who do you know that is a counterparty on the swaps that gave your pricing? I know for a fact people that have lied to CNBC, a swap is not a public contract, and CNBC is not a counterparty to any of the contracts made. It is also a simple arb strategy to short stock / long CDS when you know paulson wipes out the equity and debt holders upon takeover.
The CDS are trading more in line for a BBB+ company as of right now. My expectation is they will come back in line to higher investment grade as the CNBC CDS fear ends.
Most of Goldmans profit comes from the currency/futures trading.
22x levered is better than almost any euro bank or euro ibank.
Again they made a profit, obviously they can cover the rent on their liabilities.

Yoxxy suddenly vaulted into my "knows what the hell he's talking about" list out of nowhere!

 

[heyheybooboo]

Originally posted by: Yoxxy

Originally posted by: heyheybooboo

Originally posted by: Yoxxy

Originally posted by: Vic
There's going to be a very noticeable absence in banks' incentive to lend when the dust settles here.

Banks, can't make money unless they lend. If you cut the Ibankers salaries enough there will be a lack of lending though.

You are truly a legend in your own mind.

Nice non sequitur jumping from 'Banks can't make money unless they lend' to 'cutting investment banker salaries will result in a lack of lending'.

And way to obfuscate Goldman rating on swaps - their credit swaps trade as if their debt were rated four+ levels lower than your posted rankings.

Cliffs:

Goldman can't make money 'shorting'.
Goldman holds $1 in cash for every $22 in 'investments'.
Goldman had $845 million in net income last quarter.
Goldman has $1 trillion in liabilities and $30 billion in cash.

Who do you know that is a counterparty on the swaps that gave your pricing? I know for a fact people that have lied to CNBC, a swap is not a public contract, and CNBC is not a counterparty to any of the contracts made. It is also a simple arb strategy to short stock / long CDS when you know paulson wipes out the equity and debt holders upon takeover.
The CDS are trading more in line for a BBB+ company as of right now. My expectation is they will come back in line to higher investment grade as the CNBC CDS fear ends.
Most of Goldmans profit comes from the currency/futures trading.
22x levered is better than almost any euro bank or euro ibank.
Again they made a profit, obviously they can cover the rent on their liabilities.

I called your BS on the credit ranking of Goldman swaps and you went down like a $10 whore.

Morgan bonds were trading 60 cents on the dollar last week. Goldman bonds would not move at any price last week, would they?

You are simply begging the question. Goldman is becoming a bank holding company to gain access to Fed funds and Hank Paulson's Golden Bucket of Taxpayer Cash.

Goldman has Failed and is now a taxpayer entitlement whore. Welfare For The Wealthy.

btw - I have no idea what in the Hell you are talking about with CNBC. You do know there are Big Banks outside of NY, don't you?

 

[The-Noid]

Originally posted by: heyheybooboo

Originally posted by: Yoxxy

Originally posted by: heyheybooboo

Originally posted by: Yoxxy

Originally posted by: Vic
There's going to be a very noticeable absence in banks' incentive to lend when the dust settles here.

Banks, can't make money unless they lend. If you cut the Ibankers salaries enough there will be a lack of lending though.

You are truly a legend in your own mind.

Nice non sequitur jumping from 'Banks can't make money unless they lend' to 'cutting investment banker salaries will result in a lack of lending'.

And way to obfuscate Goldman rating on swaps - their credit swaps trade as if their debt were rated four+ levels lower than your posted rankings.

Cliffs:

Goldman can't make money 'shorting'.
Goldman holds $1 in cash for every $22 in 'investments'.
Goldman had $845 million in net income last quarter.
Goldman has $1 trillion in liabilities and $30 billion in cash.

Who do you know that is a counterparty on the swaps that gave your pricing? I know for a fact people that have lied to CNBC, a swap is not a public contract, and CNBC is not a counterparty to any of the contracts made. It is also a simple arb strategy to short stock / long CDS when you know paulson wipes out the equity and debt holders upon takeover.
The CDS are trading more in line for a BBB+ company as of right now. My expectation is they will come back in line to higher investment grade as the CNBC CDS fear ends.
Most of Goldmans profit comes from the currency/futures trading.
22x levered is better than almost any euro bank or euro ibank.
Again they made a profit, obviously they can cover the rent on their liabilities.

I called your BS on the credit ranking of Goldman swaps and you went down like a $10 whore.

Morgan bonds were trading 60 cents on the dollar last week. Goldman bonds would not move at any price last week, would they?

You are simply begging the question. Goldman is becoming a bank holding company to gain access to Fed funds and Hank Paulson's Golden Bucket of Taxpayer Cash.

Goldman has Failed and is now a taxpayer entitlement whore. Welfare For The Wealthy.

btw - I have no idea what in the Hell you are talking about with CNBC. You do know there are Big Banks outside of NY, don't you?

Goldman and Morgan already had access to the Fed in the form of the PDCF, and have to last week borrowed $0 from the Federal Reserve.

Your whole argument is based on that. http://www.newyorkfed.org/markets/pdcf_faq.html

There is no rating on CDS's, as again, these are unregulated markets. A swap is an agreement by one institution and another. This does not go through a clearing house or an exchange. I don't think you know what a Swap is, and I think you are using buzz words from other posts. Goldman CDS did not even trade up front last week...when they were erroneously quoted as 700BP.

You know nothing about banks and even less about investment banks. This is why you speak of big banks outside of NY. You can't seem to make this differentiation that investment banks are in NY, commercial banks are around the US. There is a gigantic difference between the two.

Goldman is becoming a bank holding company to get access to cheaper credit. Short Term credit is expensive currently and the model of borrowing short and loaning long is based on this, deposits are not expensive. Look at the OIS, Libor, TAF spreads, it is hard to make money in this environment, especially when the price to borrow is going up. Goldman also did not have the "toxic waste" that many of these banks had.

Come up with more stuff out of your ass...

 

[heyheybooboo]

Originally posted by: Yoxxy

Originally posted by: heyheybooboo

Originally posted by: Yoxxy

Originally posted by: heyheybooboo

Originally posted by: Yoxxy

Originally posted by: Vic
There's going to be a very noticeable absence in banks' incentive to lend when the dust settles here.

Banks, can't make money unless they lend. If you cut the Ibankers salaries enough there will be a lack of lending though.

You are truly a legend in your own mind.

Nice non sequitur jumping from 'Banks can't make money unless they lend' to 'cutting investment banker salaries will result in a lack of lending'.

And way to obfuscate Goldman rating on swaps - their credit swaps trade as if their debt were rated four+ levels lower than your posted rankings.

Cliffs:

Goldman can't make money 'shorting'.
Goldman holds $1 in cash for every $22 in 'investments'.
Goldman had $845 million in net income last quarter.
Goldman has $1 trillion in liabilities and $30 billion in cash.

Who do you know that is a counterparty on the swaps that gave your pricing? I know for a fact people that have lied to CNBC, a swap is not a public contract, and CNBC is not a counterparty to any of the contracts made. It is also a simple arb strategy to short stock / long CDS when you know paulson wipes out the equity and debt holders upon takeover.
The CDS are trading more in line for a BBB+ company as of right now. My expectation is they will come back in line to higher investment grade as the CNBC CDS fear ends.
Most of Goldmans profit comes from the currency/futures trading.
22x levered is better than almost any euro bank or euro ibank.
Again they made a profit, obviously they can cover the rent on their liabilities.

I called your BS on the credit ranking of Goldman swaps and you went down like a $10 whore.

Morgan bonds were trading 60 cents on the dollar last week. Goldman bonds would not move at any price last week, would they?

You are simply begging the question. Goldman is becoming a bank holding company to gain access to Fed funds and Hank Paulson's Golden Bucket of Taxpayer Cash.

Goldman has Failed and is now a taxpayer entitlement whore. Welfare For The Wealthy.

btw - I have no idea what in the Hell you are talking about with CNBC. You do know there are Big Banks outside of NY, don't you?

Goldman and Morgan already had access to the Fed in the form of the PDCF, and have to last week borrowed $0 from the Federal Reserve.

Your whole argument is based on that. http://www.newyorkfed.org/markets/pdcf_faq.html

There is no rating on CDS's, as again, these are unregulated markets. A swap is an agreement by one institution and another. This does not go through a clearing house or an exchange. I don't think you know what a Swap is, and I think you are using buzz words from other posts. Goldman CDS did not even trade up front last week...when they were erroneously quoted as 700BP.

You know nothing about banks and even less about investment banks. This is why you speak of big banks outside of NY. You can't seem to make this differentiation that investment banks are in NY, commercial banks are around the US. There is a gigantic difference between the two.

Goldman is becoming a bank holding company to get access to cheaper credit. Short Term credit is expensive currently and the model of borrowing short and loaning long is based on this, deposits are not expensive. Look at the OIS, Libor, TAF spreads, it is hard to make money in this environment, especially when the price to borrow is going up. Goldman also did not have the "toxic waste" that many of these banks had.

Come up with more stuff out of your ass...

oh, noes !!!

US SEC's Cox urges regulation of CDS market

The top U.S. securities regulator urged Congress on Tuesday to pass laws to regulate the $58 trillion credit default swap market and said lack of oversight was a cause for great concern. Securities and Exchange Commission Chairman Christopher Cox said there is a regulatory hole in supervision of the credit default swap (CDS) market and said there was potential for unfettered naked short-selling.

Credit default swaps are used to hedge against a borrower defaulting on its debt or to speculate on the borrower's credit quality.

"I urge you to provide in statute the authority to regulate these products to enhance investor protection and ensure the operation of fair and orderly markets," Cox said in prepared testimony to be delivered to the Senate Banking Committee.

"Neither the SEC nor any regulator has authority over the CDS market, even to require minimal disclosure to the market," he said.

Cox also said the SEC was probing broker-dealers and institutional investors with significant trading activity in financial companies and with positions in credit default swaps.

Cox said the SEC had more than 50 subprime investigations open.

Who is talking out of their ass, now ???

 

[The-Noid]

I never said they shouldn't be regulated. I said currently they aren't, and you have no idea how Swaps work. That was my point, you have just proven it.

There is no rating on CDS's, as again, these are unregulated markets. A swap is an agreement by one institution and another. This does not go through a clearing house or an exchange. I don't think you know what a Swap is, and I think you are using buzz words from other posts. Goldman CDS did not even trade up front last week...when they were erroneously quoted as 700BP.

Face it, you have been owned over and over. Keep posting news that proves my point. I love it.

Again, Goldman did not hold any toxic paper.

 

[heyheybooboo]

No, Yoxxy, you are arguing against yourself.

If you are so god damn smart, why don't you tell this forum how much it costs Goldman and Morgan to insure their swaps? Tell us, how many billions of dollars it costs to insure even 10% of their debt? C.mon, smart guy. Tell us how the "swaps loophole" exempts investment banks from reporting requirements and limits on trading positions that are required of other investors.

Tell us why Goldman and Morgan routinely short the securities they underwrite.

Tell us how the US financial system would possibly not be able to adjust to the level of financial losses inherent in the market manipulation practiced by big, bad investment banks.

I'm not buying what you are shoveling.


You are proving my point ... :

Goldman is becoming a bank holding company to get access to cheaper credit. Short Term credit is expensive currently

They are leveraged beyond control. They need depositors for cash. They need access to Hank Paulson's Golden Bucket of Taxpayer Cash.

I wonder how much Goldman wagered on a Global Depression? How much more wealth can the wealthy accumulate from the suffering of others? What kind of derivative or fancy algorithm you got for that?

 

[The-Noid]

Goldman marks positions daily. They also do not routinely short securities they underwrite as this is illegal (blah blah, unless GS is a market maker or specialist, but if you make that case you are even dumber than I thought). What you are doing is making statements that are libel and with the SS ban I would not make any statements about financials on any public forum. Choose your actions. GS leverage ratio came down as well today as they added another 10B to capital.

Oh and btw I bought 8,000 shares limit 114. You can check the trades if you get tick by tick, two lots one of 3,000 @ 113.91 other of 5,000 @ 113.85. Glad I did because I had no idea Buffet was going to put money in but I will close out at the open tomorrow, or maybe sell the October 115's and pocket the cash, don't know how long I want to be in the trade though.

That is why I make money, and you post meaningless news stories.