GS: Our Bonus Pool is Bigger than Bear Stearns' Market Cap
Today's chart porn is this lovely, lovely NYT showing of why Goldman Sachs is Da Man!, and everyone else on Wall Street are fighting for second place:
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I love the quote in this para:
"Money soothes a lot of concerns, of course, and Goldman has had plenty to spread around. Through the third quarter, Goldman’s $16.9 billion compensation pool — the money it sets aside to pay its employees — was significantly bigger than the entire $11.4 billion market capitalization of Bear Stearns."
That should be their tagline: "Our bonus pool: Bigger than Bear Stearns' market capitalization"
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Source:
Goldman Sachs Rakes in Profit in Credit Crisis
JENNY ANDERSON and LANDON THOMAS Jr.
NYT, November 19, 2007
http://www.nytimes.com/2007/11/19/business/19goldman.html
Monday, November 19, 2007 | 10:15 AM | Permalink
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Comments
I think their slogan should be
Goldman: We're a whole lot smarter than the dumbasses who bought the junk we sold.
Posted by: a5 | Nov 19, 2007 10:27:22 AM
I wonder if some hedge funds were just making long/short bets that GS would realtively outperform the other investment bankers and now it's getting out of hand and creating an artificial gap.
Posted by: super-anon | Nov 19, 2007 10:29:49 AM
Says more about the buyers/holders of Goldman's shares than the firm IMHO.
Posted by: GTFO | Nov 19, 2007 10:38:36 AM
I thought we found out that all that money they made was actually unrealized gains and level III fluff.
Posted by: Global Savings Mutt | Nov 19, 2007 10:46:54 AM
Do they leverage their personnel at the highest levels of the government to better "predict" what is going to happen with policy?
Posted by: Paul Jones | Nov 19, 2007 10:52:25 AM
why should Goldman be any different than Mozilo?
Posted by: scorpio | Nov 19, 2007 11:12:18 AM
Or how about this:
GOLDMAN - We shorted your mortgages! Now default dammit!
Posted by: UrbanDigs | Nov 19, 2007 11:13:44 AM
Or ...
Goldman Sachs: We make money the really old fashioned way. We steal it.
Or ...
Goldman Sachs: Who says crime doesn't pay?
Posted by: Al Czervik | Nov 19, 2007 11:23:14 AM
Jury's still out on Goldman Sachs.
Recently, Bloomberg reported the following levels of level 3 asset exposure:
Morgan Stanley, 251% of equity in level 3 assets
Goldman Sachs, 185% of equity in level 3 assets
Lehman Brothers, 159% of equity in level 3 assets
Bear Stearns, 154% of equity in level 3 assets
Citigroup, 105% of equity in level 3 assets
Merrill Lynch, 38% of equity in level 3 assets
Jon Fisher, who helps oversee $22 billion at Minneapolis-based Fifth Third Asset Management and sold his Goldman, Merrill, and Morgan Stanley shares in the past 12 months, told Bloomberg on November 12 that, "It's hard to believe Goldman is perfect. Their losses might be smaller than others, but that doesn't mean they don't have a problem."
Posted by: Boom2Bust.com | Nov 19, 2007 11:30:18 AM
So they could buy out Bear at this point but are giving it away instead. Nice message to send to shareholders.
Posted by: wally | Nov 19, 2007 11:41:33 AM
I do not understand how shareholders accept such level of bonus on RISK ASSETS
Posted by: Philippe | Nov 19, 2007 11:45:14 AM
Short with the firm's money what they're long with the clients' money?
Conflict of interest much?
Posted by: ZackAttack | Nov 19, 2007 12:10:38 PM
I have yet to see referenced in this or other blogs (and the MSM for that matter)what is considered the normal or average percent of equity that the banks carry in Level III assets? In the course of normal operations a bank will carry some thinly traded derivatives. I'd be more interested to see which of the banks has extended itself and by how much past its normal thresholds from the past.
Posted by: Bonghiteric | Nov 19, 2007 1:03:44 PM
I'm not sure that equity would be the best benchmark for assessing L3 risk. By definition, these assets are illiquid, so maybe the better question is the duration (liquidity) of debt serviced by the L3 assets. Equity doesn't necessarily need to be serviced or repaid. Debt does.
Posted by: Estragon | Nov 19, 2007 1:52:22 PM
So now we know who is benefiting from the manipulation of our economy.....
Posted by: donna | Nov 19, 2007 2:03:35 PM
Goldman Sachs: The government's in our pocket so our hands can be in yours!
Posted by: DavidB | Nov 19, 2007 2:10:24 PM
Estragon wrote: ..maybe the better question is the duration (liquidity) of debt serviced by the L3 assets...
I agree. I'm guessing that Bloomberg was quantifying the banks' Level III exposure effect to equity that any non-cash hit to earnings (writedown)would cause? Still my question remains, by what percent or dollar figure are the banks holding these assets beyond their historical trend. OR is this an unknown because prior to the FASB ruling the Level III assets were included with the Level II assets? Just looking for some perspective.
Posted by: Bonghiteric | Nov 19, 2007 3:01:32 PM
Just think how high they would've been without this credit debacle. Oh ya, forgot, they haven't materially written down anything YET. They'll just save those for next year. If I was a Goldman client, I'd be pissed.
Posted by: Stuart | Nov 19, 2007 3:33:40 PM
Their tagline should be "While the other guys were screwing you, we were screwing them! We're the evilest! Woot!"
Posted by: popo | Nov 19, 2007 11:10:29 PM
In response to Wally above: "I do not understand how shareholders accept such level of bonus on RISK ASSETS"
Because the entire world is confused about debt as an asset. I can't tell you the number of articles I read in the Economist, the Wall St. Journal and the NY Times that are confused about this single point:
In order to accurately measure debt as an asset one would have to be able to *accurately* predict risk. Since that is not possible, it is not possible to measure risk an asset.
And yet... they do. And they pat themselves on the back when they create debt. And they bonus themselves as if they have created a rock solid framework of revenue yielding assets.
The smart ones know. And they know that the game is essentially "theft" and "misrepresentation". But when the pay's that good -- well -- screw you.
Posted by: popo | Nov 19, 2007 11:15:14 PM
Since when is it legal for the U.S. Treasury to have a bonus pool?
Posted by: Winston Munn | Nov 19, 2007 11:43:52 PM
"Do they leverage their personnel at the highest levels of the government to better "predict" what is going to happen with policy?"
yes.
The "worthies" of GS also short the living crap out of their own banking associates and clients based on inside information....
....and i hear they taste like chicken....
-21st century peasant
Posted by: brion | Nov 20, 2007 12:04:22 AM
The new Goldman Slogan:
That ain't doody floatin' in our bonus pool - those are assettes.
Posted by: Winston Munn | Nov 20, 2007 12:45:53 AM
You all sound like bitter housewives clucking over the new neighbors' rich lifestyle. Get over it and go buy some GS shares.
Posted by: Brit | Nov 20, 2007 3:00:35 AM
Always an apologist in the bunch.
Posted by: a5 | Nov 20, 2007 6:56:04 AM
"You all sound like bitter housewives clucking over the new neighbors' rich lifestyle. Get over it and go buy some GS shares."
The bonus is much better than the dividend, and a real job more attractive than a bonus.
Posted by: Blon | Nov 20, 2007 7:13:28 AM
It says compensation pool " the money it sets aside to pay its employees " .. not bonus money pool.
Also, GS with 30K employees, and Bear Sterns with 15K employees, I would not be surprised to see if Bear's "Compensation Pool" is nearly half of GS's :D
btw, I agree with GS's smarts .. !!
Posted by: Sourdough Pretzel | Nov 21, 2007 1:36:23 AM
