KeNo's Housing and Economic Portal: Thursday March 29 Housing and Economic stories

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TOP STORIES:

Goldman Sachs Employee Criticizes Firm for Ripping Off Clients - (www.bloomberg.com) A departing Goldman Sachs Group Inc. (GS) employee mounted an unprecedented public attack on its “toxic and destructive” culture in a New York Times opinion piece, becoming the first serving insider to openly criticize the firm. Greg Smith, identified by the newspaper as an executive director and head of the firm’s U.S. equity derivatives business in Europe, will leave the firm after 12 years, blaming Chief Executive Officer Lloyd Blankfein and President Gary Cohn for losing hold over the firm’s culture. Executive directors are junior to managing directors and partners, the most senior rank. “I attend derivatives sales meetings where not one single minute is spent asking questions about how we can help clients,” Smith, a Stanford University graduate, wrote in the New York Times. “It’s purely about how we can make the most possible money off of them.”

JPMorgan’s $28 Billion Leads Bank Trading Losses in Tests - (www.bloomberg.com) JPMorgan Chase & Co. (JPM), which produced the most trading revenue among Wall Street firms last year, had the highest trading and counterparty losses of the biggest U.S. banks under the Federal Reserve’s stress scenario. JPMorgan had an estimated $27.7 billion in projected losses from mark-to-market changes, credit valuation adjustments and counterparty default losses, according to the Fed results released yesterday. Goldman Sachs Group Inc. (GS) had an estimated $27.1 billion of such losses in the testing. The Fed is requiring the nation’s largest lenders to show they have credible plans for maintaining capital and continuing lending in an economic downturn. The six largest U.S. banks had a projected $116 billion in trading and counterparty losses, larger than the 19 banks subjected to Fed’s stress tests had in any lending area.

Citigroup, SunTrust Banks Capital Plans Fail Fed Stress Tests - (www.bloomberg.com) Citigroup Inc. (C), the lender that took the most government aid during the financial crisis, will seek approval for a “meaningful” payout to shareholders after failing to meet minimum standards in U.S. stress tests. “We still believe that our company has the capacity to return more capital to shareholders,” Chief Executive Officer Vikram Pandit said in an internal memorandum obtained by Bloomberg News. “We will work with the Federal Reserve to formulate a plan that returns meaningful capital while satisfying our regulators.” The Fed objected yesterday to Citigroup’s capital plan, which may have included a request for a higher dividend. SunTrust Banks Inc. (STI), Ally Financial Inc. and MetLife Inc. (MET) also fell short in the Fed’s test of how 19 of the nation’s biggest lenders would fare in a severe economic slump.

William Cohan: Greg Smith Is In The Witness Protection Program Right Now - (www.businessinsider.com) Bloomberg columnist William Cohan knows something about Wall Street. He's the author of 'Money and Power: How Goldman Sachs Came to Rule the World', so naturally he got to comment about Greg Smith's Goldman Sachs resignation op-ed. And Cohan didn't mince words: “He's toast. He is completely toast in terms of Wall Street, no question about that. He is in the witness protection program right now." Not that Cohan doesn't agree with Smith. In fact, he said that "Goldman's culture has gotten off the tracks. They espouse this idea of the client comes first but in fact, we know time and again, whether it's the Abacus transaction or a number of other things that they did in the financial crisis beginning in 2006 when they put the big short on and they continued to sell mortgage-backed securities to their clients at par, that Goldman has been putting itself first."

Some Banks Got over $2 Trillion in Loans and Other Bailouts - (www.againstcronycapitalism.org) The following list is from page Page 131 of the GAO Fed Investigation Report. The amounts are simply stunning, and far beyond the amounts most people believed were doled out between 2007-2009. Citigroup alone got $2.5 trillion. The entire GDP of the United States is around $14.5 trillion.

The below numbers reflect a number of Fed sponsored loan programs from very short term, to medium term.

· Citigroup – $2.513 trillion

· Morgan Stanley – $2.041 trillion

· Merrill Lynch – $1.949 trillion

· Bank of America – $1.344 trillion

· Barclays PLC – $868 billion

· Bear Sterns – $853 billion

· Goldman Sachs – $814 billion

· Royal Bank of Scotland – $541 billion

· JP Morgan Chase – $391 billion

· Deutsche Bank – $354 billion

· UBS – $287 billion