Bailout of hedge-fund at Goldman Sachs

Bailout of hedge-fund at Goldman Sachs

Just got to love those multiple sets of 'Books'!

What’s that Old Saying... Liars figure... ?

Sorta apropos for Accountanting and Financial Wizardry!

Banks backin' big bailout...
:eek:
Banks May Pool Billions to Avert Securities Sell-off
October 14, 2007 - Several of the world’s biggest banks are in talks to put up about $75 billion in a backup fund that could be used to buy risky mortgage securities and other assets, a move designed to ease pressure on a crucial part of the credit markets that threatens the broader economy.

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Citigroup, Bank of America and JPMorgan Chase, along with several other financial institutions, have been meeting to come up with a plan to create a fund that could prevent a sharp sell-off in securities owned by bank-affiliated investment vehicles. The meetings, which began three weeks ago, have been orchestrated by senior officials at the Treasury Department, and the discussions have intensified in the last few days.

A broad framework for an agreement could be reached as early as tomorrow, according to people with knowledge of the discussions, but many important details still need to be hammered out. Another round of discussions is taking place this weekend, and it is still possible that the parties will not reach an agreement.

“Treasury is very serious about getting some solution in place to take away the fear hanging over the markets,” said Alex Roever, a credit analyst at JPMorgan Chase who has been following the discussions but is not involved in them. “It is a very challenging thing to do. There are so many parties involved and they all don’t agree.

The proposal echoes the 1998 bailout of the hedge fund Long Term Capital Management, when a group of big banks came together to prevent the fund from collapsing after it made a series of bad bets. And the current round of crisis-driven collaboration illustrates the heightened level of concern among both government and financial players.

[url=http://www.nytimes.com/2007/10/14/business/14bank.html?hp:
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Citigroup: 'Gimme shelter'
:eek:
October 29 2007: Why on earth, Fortune’s Allan Sloan asks, should we protect banks from their mistakes?

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This may sound silly, but let me ask you a question. Let’s say that I maxed out my credit at Citigroup to speculate on a house whose market price is now less than what I paid. Citi wants its money, but instead I say, “Sorry, the house is selling for less than its true value. As soon as it sells for what it should, I’ll send you a check." What do you think Citi’s reaction would be? How about “Sir, where should I send the repo man?"

Well, folks, Citi seems to have put itself in just such a fix by borrowing lots of money to buy assets that have dropped in market value. But instead of summoning the repo (as in repossession) man, some of the world’s biggest hitters are trying to set up a huge fund to buy time for Citi and some other institutions with similar problems.

The idea is to set up a $100 billion “master liquidity enhancement conduit” to take some of the $80 billion of suspect securities off Citi’s hands so that it doesn’t have to sell them in the current market. Other institutions have about $300 billion worth. (This conduit is being called a superfund, to the delight of those of us who live in New Jersey, for whom the term evokes images of toxic industrial waste. But I digress.)

The problem here, as you probably know, involves seven of Citi’s “structured investment vehicles," known as SIVs. They borrowed short-term money to buy long-term assets, such as mortgage-backed securities, that have fallen in market value. Regulators and various big institutions are trying to stabilize things to avoid what we can call SIVilis. That’s a financially transmitted disease that could infect the world’s financial markets, leading to cascading failures and other consequences too dire to even think about.

[url=http://money.cnn.com/2007/10/26/magazines/fortune/citishelter.fortune/index.htm?section=money_mostpopular:
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Citi gonna eat its losses...
:p
Citigroup says it will absorb SIV assets
Dec. 13, 2007 - Move bails out struggling investment vehicles but could hurt capital base

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Citigroup said late Thursday that it will take $49 billion worth of assets from several investment entities that have been damaged by the subprime mortgage meltdown and add that to its own balance sheet - a move that could cut deeply into the Wall Street giant’s capital base. In a statement, Citigroup said it is committed to “resolving uncertainties” regarding the structured investment vehicles, or SIVs, that it advises.

SIVs are funds that use money borrowed under short-term agreements - typically commercial paper - to buy longer-term, higher yielding debt investments, which have included subprime mortgage-related assets. As the credit markets have tightened in response to growing instability in the sub-prime mortgage market, SIVs have struggled to secure financing, which in turn has sparked concerns that they may have to sell their assets into a weak market.

“Our team has made great progress managing the SIVs in a very difficult environment. After considering a full range of funding options, this commitment is the best outcome for Citi and the SIVs," Citi’s newly appointed CEO Vikram Pandit said in a statement. The company said the SIVs' assets have shed more than 40% of their value since August, falling from a total value of $87 billion to $49 billion currently, while “maintaining the overall high credit quality of the portfolio." Liquidity requirements through next year will be met by “orderly asset reductions," Citi said in its statement.

[url=http://www.marketwatch.com/news/story/citi-plans-absorb-49-billion/story.aspx?guid=%7B19DFDB79-8217-4B35-BD92-C3C15A74AC8C%7D:
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Goldman starting new hedge fund...
:cool:
New Goldman hedge fund to start with over $6 billion
Mon Dec 17, 2007 - A new Goldman Sachs Group (GS.N) stock hedge fund could be launched with more than $6 billion, with some investors expecting the fund to attract as much $10 billion, people familiar with the fund said.

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Goldman has been raising money and preparing to launch its latest fund for the past few months. Goldman Chief Executive Lloyd Blankfein told investors last month the new long-short fund would focus on equities and help diversify the firm’s fund offerings for clients. The fund also will help Goldman retain successful traders who might otherwise be tempted to strike out on their own or join a rival firm. A spokeswoman for Goldman declined to comment.

Goldman Sachs Investment Partners, the new fund, is set to open for business on January 1. It will be managed by two men who traded for Goldman’s own accounts: Raanan Agus, head of principal strategies since 2003, and Kenneth Eberts, head of U.S. investments over the same period. It has been an unusually tough year for Goldman Sachs Asset Management (GSAM), where market turmoil slammed Goldman’s Global Alpha fund, which started 2007 with more than $10 billion in assets and could end the year at less than $6 billion after market declines and withdrawals.

A computer driven stock fund, Global Equity Opportunities, plunged by almost 25 percent in August. Goldman and some outside investors pumped $3 billion of new capital into the fund. These setbacks have hurt Goldman by eating into fees. “As you know, we’ve had issues with the performance of certain of our quantitative funds, as have others in this space," Blankfein said at the investor conference.

“While direct quantitative hedge funds represent only 5 percent of our assets under management, we realized it would be prudent to further expand our product portfolio in actively managed strategies," he said. Goldman has opened Liberty Harbor, a $2.7 billion credit hedge fund, and GS Liquidity Partners, a $1.8 billion distressed debt fund. GSAM has about $800 billion assets under management, up from $50 billion when the asset management business was launched 12 years ago. It has grown to become one of the biggest hedge fund managers in the world.

[url=http://news.yahoo.com/s/nm/20071217/bs_nm/goldmansachs_hedgefund_dc:
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For a job well done??...
:rolleyes:
Goldman’s Blankfein collects $68M bonus
December 21 2007: Payday in restricted stock, options and cash marks biggest ever for Wall Street CEO.

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Goldman Sachs Chairman and CEO Lloyd Blankfein will take home nearly $68 million in restricted stock, options and cash, making it the largest bonus ever given to a Wall Street CEO. Blankfein was awarded $26.8 million in cash and $41.1 million in restricted stock and stock options, according to a company filing with the Securities and Exchange Commission issued Friday.

With this year’s bonus, Blankfein shatters the record he set a year ago, when he was awarded $54 million. News reports had originally projected that Blankfein will take home as much as $70 million, after helping to lead the company through this summer’s market meltdown and the ongoing credit crisis.

Unlike some of its rivals, which have witnessed billions of dollars evaporate from their balance sheets, Goldman Sachs has proved unshakable. Just this week, the company reported better-than-expected fourth-quarter earnings, while peers like Morgan Stanley and Bear Stearns recorded steep losses.

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