2010-04-26 03:51:32frank
[US] 凡有損華爾街的，應該就對國家有利！
通用汽車公司總經理Charlie Wilson 的名言：「凡有利通用汽車的，就對國家(美國)有利。」（What is good for General Motors is good for America.）這是1955年光榮時代的 GM 所誇下的豪語。不過當美國政府成為 GM 最大股東的現在，這句話不再只是管理者的自負，而成了無需解釋的真理了。前天在克魯格曼(Paul Krugman)的專欄裡讀到他改寫這句名言「凡有損於華爾街的，應該就對國家(美國)有利！」（..what's bad for Wall Street would be good for America.）
美國證管會(The Securities and Exchange Commssion)告高盛(Goldman Sachs)一案，或許我們不該去討論高盛是否詐欺，是否惡意銷售合成式債務憑證 (synthetic collateralized debt obligation)，而應該去問為什麼會有這種商品？花了不少時間去研究這個合成式債務憑證，但是還是搞不懂這是甚麼東西，或許要實際操作者才會知道。－－但是很清楚的，synthetic C.D.O.既不是一種債劵，不是貸款，也不是股票；它既沒有分散或轉嫁風險，也沒有讓資金有效運用於其他農、牧、工、礦的生產、製造業或服務業，增加就業，更沒有促進金融環境的穩定！它比較像是擲骰子或是撲克牌的 black Jack。
那麼買賣這種衍生性金融商品，和到賭場賭一把有何不同呢？不過可以確定的是：賭場和銀行的經營與社會的影響截然不同。賭場經營者通常不會下場賭幾把，但是投資銀行會（集合投資人的錢）買衍生性金融商品－－賭贏了，賺大錢，領高額紅利；賭輸了，反正是別人的錢！只要搞大，投資人就會捧著錢上門來；如果賠到都經營不下去了，因為規模大，對經濟的影響深遠，政府還會提供大量的資金。－－這就是華爾街的致富公式！
「凡有損於華爾街的，應該就對國家有利！」（..what's bad for Wall Street would be good for America.）我想應該用陳述語氣(the indicative)，就直接套用 Charlie Wilson 的語法：「凡有損於華爾街的，就對國家有利！」"What is bad for Wall Street is good for America."
April 22, 2010
Editorial
After Goldman
After the government sued Goldman Sachs for fraud, a lot of politicians vowed to finally clean up the system. In an important committee vote on Wednesday, 13 senators — including one Republican for a refreshing change — approved a measure that would go a long way toward regulating derivatives, the complex instruments at the heart of the bubble, the bust, the bailouts and the Goldman case.
It is still not tough enough to avoid another catastrophe. While the bill rightly calls for most derivatives deals — currently private contracts — to be traded on regulated exchanges, it has too many loopholes. And it doesn’t ban the sort of excessive speculation that characterized the Goldman deal.
The taxpayers are gaining, but the banks — which make a lot of money on derivatives — are still way ahead.
The bill would allow too many trades to be done off the exchanges. Regulators would be able to police them, but there would be no ongoing investor oversight. There are carve-outs for certain corporate users of derivatives and for contracts tailored to unique purposes. The bill also would allow the Treasury secretary to exempt an entire type of derivative known as foreign exchange swaps.
Corporate pension funds that invest in derivatives would be subjected to less scrutiny than is required of many other investors. The financing arms of major manufacturers would also escape full scrutiny. All of that is going in the wrong direction.
Which brings us back to Goldman. A court will have to decide if the bank committed fraud. The Securities and Exchange Commission says that Goldman designed a derivative — a “synthetic collateralized debt obligation,” or C.D.O. — that would have a high chance of falling in value, at the request of a hedge fund client who wanted to bet against it. The S.E.C. charges that Goldman misled investors by not revealing the hedge fund’s role in selecting the investments. Goldman says it was not obligated to do so.
The current reforms being considered by Congress might at least have made Goldman think twice about that obligation. Both the agriculture and banking committees’ bills impose business conduct standards that would require dealers to disclose conflicts of interest.
It is not clear if the current bills would require synthetic C.D.O.’s to be exchange-traded. If they were, that would give investors a fighting chance to figure out the game. In addition to providing information about prices and volumes, exchange trading would subject derivatives to a full range of regulations, including disclosure and reporting requirements and stricter antifraud rules.
The bills also call for regulators to set adequate capital requirements for major dealers and participants so that there would be a cushion when derivative investments go bad.
What all those proposals don’t address is whether the type of derivative Goldman was selling should even be allowed to exist. The Goldman deal was nothing more than a bet on the mortgage market, in which one side was destined to win and the other to lose, without “investing” anything in the real economy. The C.D.O. did not hold actual mortgage-related bonds, but rather allowed the participants to stake a position on whether bonds owned by others would perform well, or tank. And that helped to further inflate the housing bubble.
That is not investing. It is gambling, and it is abusive. It has no place in banks that can bring down the system if they fail.
Yet none of the pending reform bills would ban abusive derivatives. Instead, regulators would be limited to gathering information about potential abuses and reporting their concerns to Congress.
The bill does say that the regulator cannot approve “gaming contracts.” But C.D.O.’s are often so complex that it may be difficult to figure out if they are, in fact, gaming or a threat to the broader economy.
Congress should ban both gaming and abusive derivatives. That would help clarify the difference between pure speculation and true hedging. It would start to restore what has been lost in the crisis: public confidence in the integrity of financial markets.
http://www.nytimes.com/2010/04/22/opinion/22thu1.html?scp=2&sq=&st=nyt
April 19, 2010
When Wall Street Deals Resemble Casino Wagers
By ANDREW ROSS SORKIN
The government’s civil fraud case against Goldman Sachs raises so many provocative questions.
Did the firm deliberately mislead its clients who bought a mortgage-related investment without the knowledge that it was devised to fail? Was it fair that a bearish hedge fund manager helped to pick the parts of an investment marketed as bullish, so that he could bask in the winnings?
Who besides the vice president named in the lawsuit knew details of the deal in question? Were there other deals like this one?
But if there is a larger question, it is this: Why was Goldman, or any regulated bank, allowed to create and sell a product like the synthetic collateralized debt obligation at the center of this case? What purpose does a synthetic C.D.O., which contains no actual mortgage bonds, serve for the capital markets, and for society?
The blaring Goldman Sachs headlines of the last few days have given the public a crash course in synthetic C.D.O.’s. Many more people now know that synthetic C.D.O.’s are a simple wager.
In this case they were a bet on the value of a bundle of mortgages that the investors didn’t even own. (That’s why it is called a derivative.)
One side bets the value will rise, and the other side bets it will fall. It is no different than betting on the New York Yankees vs. the Oakland Athletics, except that if a sports bet goes bad, American taxpayers don’t pay the bookie.
“With a synthetic C.D.O., it’s a pure bet,” said Erik F. Gerding, a former securities lawyer at Cleary Gottlieb Steen & Hamilton who is now a law professor at the University of New Mexico. “It is hard to see what the social value is — it’s hard to see why you’d want to encourage these bets.”
Social value is a timely question because regulating derivatives is the issue du jour in Washington as a set of proposed financial reforms moves though the Senate. The Obama administration’s plan includes a rule to require any banks that create a synthetic C.D.O. to keep a stake of at least 5 percent, in an effort to keep them accountable and eating their own cooking. But is that enough?
Because structuring derivatives like synthetic C.D.O.’s is so lucrative — $20 billion a year, by some estimates — it’s no surprise that Goldman Sachs is among the banks that oppose regulating them.
“The pushback on regulating derivatives is quite amazing,” said David Paul, president of the Fiscal Strategies Group, an advisory firm specializing in municipal and project finance. “It’s all just become a casino. They argue there is social utility — but you know intuitively this is wrong.”
Through their powerful lobbying arms, Goldman Sachs, JPMorgan Chase and others have been trying to convince lawmakers that tough regulation on derivatives would stymie the capital markets.
“I believe that synthetic C.D.O.’s have a very useful purpose in facilitating the management of risk,” said Sean Egan, managing director of Egan-Jones Ratings, echoing the view of many in the industry. “Just as options have a valid position in the investment universe, so do synthetics. Such instruments facilitate the flow of capital.”
Unlike Moody’s and Standard & Poor’s, Mr. Egan’s agency takes fees from investors, not issuers, for its research. Many critics of the big agencies say this approach presents fewer conflicts, presumably yielding a more honest assessment of an asset’s risk.
Still, Mr. Egan needs products to rate, so his position on derivatives is not that surprising. The core problem with the disputed C.D.O., and other structured finance transactions, was that “investors relied on flawed assessments of risk,” Mr. Egan said.
(By the way, we aren’t hearing lots of questions about the role the big agencies played in rating this Goldman C.D.O., but they clearly misrated it. If they had known that the hedge fund tycoon John A. Paulson had shaped the portfolio and was betting against it, would they have provided the same rating?)The Securities and Exchange Commission, in its suit, says that Mr. Paulson asked Goldman to help create a synthetic C.D.O. of lousy mortgage loans that he selected so he could bet that they would go down and then profit on their fall.
Of course, as with any bet of this sort, Goldman needed an investor to take the opposite position. Goldman found that in firms like IKB Deutsche Industriebank and ABN Amro. They weren’t told, however, that Mr. Paulson had heavily influenced which assets were included.
The case against Goldman could pivot on whether this omission was “material” to investors. Goldman says it wasn’t. It maintains that the investors got to see every mortgage in the basket, and that the manager of the deal, ACA Management, replaced some of Mr. Paulson’s picks with its own.
What’s more, Goldman has said over and over that it arranged these trades for sophisticated investors, not casual 401(k) savers. Goldman’s investors had the expertise and should have known better.
It’s an argument that, while true, makes some people cringe.
“It’s astonishing that they always say ‘sophisticated investors did this,’ ” said Mr. Paul, the financial adviser. “Look at the failure of Lehman and Bear. They were all sophisticated investors.”
This kind of high finance can numb the brain, and the legal questions are murky. But when you strip all of that away, this deal was nothing more than a roll of the dice.
Try this mental exercise: Imagine if, a few years ago, an influential investor like Warren Buffett, bullish on real estate, had asked Goldman to develop a synthetic C.D.O. made up of undervalued mortgages.
Now, imagine if Goldman had found John Paulson to take the opposite side of the trade and, lo and behold, a year later Mr. Buffett turned out to be right and Mr. Paulson lost his shirt. Would you call that fraud? Would you be very upset?
Maybe not, but Mr. Paulson sure would be. And he might be inclined to sue over it, especially if he found out that his bet had been rigged against him from the start. Which brings us back to the financial legislation being debated in Washington.
“Ultimately,” Mr. Gering, the securities lawyer, said, “litigation is a poor substitute for regulation.”
The latest news on mergers and acquisitions can be found at nytimes.com/dealbook.
http://www.nytimes.com/2010/04/20/business/20sorkin.html
美國證管會(The Securities and Exchange Commssion)告高盛(Goldman Sachs)一案，或許我們不該去討論高盛是否詐欺，是否惡意銷售合成式債務憑證 (synthetic collateralized debt obligation)，而應該去問為什麼會有這種商品？花了不少時間去研究這個合成式債務憑證，但是還是搞不懂這是甚麼東西，或許要實際操作者才會知道。－－但是很清楚的，synthetic C.D.O.既不是一種債劵，不是貸款，也不是股票；它既沒有分散或轉嫁風險，也沒有讓資金有效運用於其他農、牧、工、礦的生產、製造業或服務業，增加就業，更沒有促進金融環境的穩定！它比較像是擲骰子或是撲克牌的 black Jack。
那麼買賣這種衍生性金融商品，和到賭場賭一把有何不同呢？不過可以確定的是：賭場和銀行的經營與社會的影響截然不同。賭場經營者通常不會下場賭幾把，但是投資銀行會（集合投資人的錢）買衍生性金融商品－－賭贏了，賺大錢，領高額紅利；賭輸了，反正是別人的錢！只要搞大，投資人就會捧著錢上門來；如果賠到都經營不下去了，因為規模大，對經濟的影響深遠，政府還會提供大量的資金。－－這就是華爾街的致富公式！
「凡有損於華爾街的，應該就對國家有利！」（..what's bad for Wall Street would be good for America.）我想應該用陳述語氣(the indicative)，就直接套用 Charlie Wilson 的語法：「凡有損於華爾街的，就對國家有利！」"What is bad for Wall Street is good for America."
April 22, 2010
Editorial
After Goldman
After the government sued Goldman Sachs for fraud, a lot of politicians vowed to finally clean up the system. In an important committee vote on Wednesday, 13 senators — including one Republican for a refreshing change — approved a measure that would go a long way toward regulating derivatives, the complex instruments at the heart of the bubble, the bust, the bailouts and the Goldman case.
It is still not tough enough to avoid another catastrophe. While the bill rightly calls for most derivatives deals — currently private contracts — to be traded on regulated exchanges, it has too many loopholes. And it doesn’t ban the sort of excessive speculation that characterized the Goldman deal.
The taxpayers are gaining, but the banks — which make a lot of money on derivatives — are still way ahead.
The bill would allow too many trades to be done off the exchanges. Regulators would be able to police them, but there would be no ongoing investor oversight. There are carve-outs for certain corporate users of derivatives and for contracts tailored to unique purposes. The bill also would allow the Treasury secretary to exempt an entire type of derivative known as foreign exchange swaps.
Corporate pension funds that invest in derivatives would be subjected to less scrutiny than is required of many other investors. The financing arms of major manufacturers would also escape full scrutiny. All of that is going in the wrong direction.
Which brings us back to Goldman. A court will have to decide if the bank committed fraud. The Securities and Exchange Commission says that Goldman designed a derivative — a “synthetic collateralized debt obligation,” or C.D.O. — that would have a high chance of falling in value, at the request of a hedge fund client who wanted to bet against it. The S.E.C. charges that Goldman misled investors by not revealing the hedge fund’s role in selecting the investments. Goldman says it was not obligated to do so.
The current reforms being considered by Congress might at least have made Goldman think twice about that obligation. Both the agriculture and banking committees’ bills impose business conduct standards that would require dealers to disclose conflicts of interest.
It is not clear if the current bills would require synthetic C.D.O.’s to be exchange-traded. If they were, that would give investors a fighting chance to figure out the game. In addition to providing information about prices and volumes, exchange trading would subject derivatives to a full range of regulations, including disclosure and reporting requirements and stricter antifraud rules.
The bills also call for regulators to set adequate capital requirements for major dealers and participants so that there would be a cushion when derivative investments go bad.
What all those proposals don’t address is whether the type of derivative Goldman was selling should even be allowed to exist. The Goldman deal was nothing more than a bet on the mortgage market, in which one side was destined to win and the other to lose, without “investing” anything in the real economy. The C.D.O. did not hold actual mortgage-related bonds, but rather allowed the participants to stake a position on whether bonds owned by others would perform well, or tank. And that helped to further inflate the housing bubble.
That is not investing. It is gambling, and it is abusive. It has no place in banks that can bring down the system if they fail.
Yet none of the pending reform bills would ban abusive derivatives. Instead, regulators would be limited to gathering information about potential abuses and reporting their concerns to Congress.
The bill does say that the regulator cannot approve “gaming contracts.” But C.D.O.’s are often so complex that it may be difficult to figure out if they are, in fact, gaming or a threat to the broader economy.
Congress should ban both gaming and abusive derivatives. That would help clarify the difference between pure speculation and true hedging. It would start to restore what has been lost in the crisis: public confidence in the integrity of financial markets.
http://www.nytimes.com/2010/04/22/opinion/22thu1.html?scp=2&sq=&st=nyt
Andrew Harrer/Bloomberg News
TheSecurities and Exchange Commission has taken ona risky case as it triesto re-establish its credibility as anenforcer. The outcome hinges onthe strength of the evidence it hasgathered.
TheSecurities and Exchange Commission has taken ona risky case as it triesto re-establish its credibility as anenforcer. The outcome hinges onthe strength of the evidence it hasgathered.
April 19, 2010
When Wall Street Deals Resemble Casino Wagers
By ANDREW ROSS SORKIN
The government’s civil fraud case against Goldman Sachs raises so many provocative questions.
Did the firm deliberately mislead its clients who bought a mortgage-related investment without the knowledge that it was devised to fail? Was it fair that a bearish hedge fund manager helped to pick the parts of an investment marketed as bullish, so that he could bask in the winnings?
Who besides the vice president named in the lawsuit knew details of the deal in question? Were there other deals like this one?
But if there is a larger question, it is this: Why was Goldman, or any regulated bank, allowed to create and sell a product like the synthetic collateralized debt obligation at the center of this case? What purpose does a synthetic C.D.O., which contains no actual mortgage bonds, serve for the capital markets, and for society?
The blaring Goldman Sachs headlines of the last few days have given the public a crash course in synthetic C.D.O.’s. Many more people now know that synthetic C.D.O.’s are a simple wager.
In this case they were a bet on the value of a bundle of mortgages that the investors didn’t even own. (That’s why it is called a derivative.)
One side bets the value will rise, and the other side bets it will fall. It is no different than betting on the New York Yankees vs. the Oakland Athletics, except that if a sports bet goes bad, American taxpayers don’t pay the bookie.
“With a synthetic C.D.O., it’s a pure bet,” said Erik F. Gerding, a former securities lawyer at Cleary Gottlieb Steen & Hamilton who is now a law professor at the University of New Mexico. “It is hard to see what the social value is — it’s hard to see why you’d want to encourage these bets.”
Social value is a timely question because regulating derivatives is the issue du jour in Washington as a set of proposed financial reforms moves though the Senate. The Obama administration’s plan includes a rule to require any banks that create a synthetic C.D.O. to keep a stake of at least 5 percent, in an effort to keep them accountable and eating their own cooking. But is that enough?
Because structuring derivatives like synthetic C.D.O.’s is so lucrative — $20 billion a year, by some estimates — it’s no surprise that Goldman Sachs is among the banks that oppose regulating them.
“The pushback on regulating derivatives is quite amazing,” said David Paul, president of the Fiscal Strategies Group, an advisory firm specializing in municipal and project finance. “It’s all just become a casino. They argue there is social utility — but you know intuitively this is wrong.”
Through their powerful lobbying arms, Goldman Sachs, JPMorgan Chase and others have been trying to convince lawmakers that tough regulation on derivatives would stymie the capital markets.
“I believe that synthetic C.D.O.’s have a very useful purpose in facilitating the management of risk,” said Sean Egan, managing director of Egan-Jones Ratings, echoing the view of many in the industry. “Just as options have a valid position in the investment universe, so do synthetics. Such instruments facilitate the flow of capital.”
Unlike Moody’s and Standard & Poor’s, Mr. Egan’s agency takes fees from investors, not issuers, for its research. Many critics of the big agencies say this approach presents fewer conflicts, presumably yielding a more honest assessment of an asset’s risk.
Still, Mr. Egan needs products to rate, so his position on derivatives is not that surprising. The core problem with the disputed C.D.O., and other structured finance transactions, was that “investors relied on flawed assessments of risk,” Mr. Egan said.
(By the way, we aren’t hearing lots of questions about the role the big agencies played in rating this Goldman C.D.O., but they clearly misrated it. If they had known that the hedge fund tycoon John A. Paulson had shaped the portfolio and was betting against it, would they have provided the same rating?)The Securities and Exchange Commission, in its suit, says that Mr. Paulson asked Goldman to help create a synthetic C.D.O. of lousy mortgage loans that he selected so he could bet that they would go down and then profit on their fall.
Of course, as with any bet of this sort, Goldman needed an investor to take the opposite position. Goldman found that in firms like IKB Deutsche Industriebank and ABN Amro. They weren’t told, however, that Mr. Paulson had heavily influenced which assets were included.
The case against Goldman could pivot on whether this omission was “material” to investors. Goldman says it wasn’t. It maintains that the investors got to see every mortgage in the basket, and that the manager of the deal, ACA Management, replaced some of Mr. Paulson’s picks with its own.
What’s more, Goldman has said over and over that it arranged these trades for sophisticated investors, not casual 401(k) savers. Goldman’s investors had the expertise and should have known better.
It’s an argument that, while true, makes some people cringe.
“It’s astonishing that they always say ‘sophisticated investors did this,’ ” said Mr. Paul, the financial adviser. “Look at the failure of Lehman and Bear. They were all sophisticated investors.”
This kind of high finance can numb the brain, and the legal questions are murky. But when you strip all of that away, this deal was nothing more than a roll of the dice.
Try this mental exercise: Imagine if, a few years ago, an influential investor like Warren Buffett, bullish on real estate, had asked Goldman to develop a synthetic C.D.O. made up of undervalued mortgages.
Now, imagine if Goldman had found John Paulson to take the opposite side of the trade and, lo and behold, a year later Mr. Buffett turned out to be right and Mr. Paulson lost his shirt. Would you call that fraud? Would you be very upset?
Maybe not, but Mr. Paulson sure would be. And he might be inclined to sue over it, especially if he found out that his bet had been rigged against him from the start. Which brings us back to the financial legislation being debated in Washington.
“Ultimately,” Mr. Gering, the securities lawyer, said, “litigation is a poor substitute for regulation.”
The latest news on mergers and acquisitions can be found at nytimes.com/dealbook.
http://www.nytimes.com/2010/04/20/business/20sorkin.html