Charlie Gasparino thinks the outcome of the SEC’s charges against Goldman – a so-called chump change settlement of $550 million without admitting or denying wrongdoing – was actually a huge deal.
He argues that it totally changed the way Goldman has to do business now, and that there’s an internal freak-out going on at the company.
He told FINAlternatives:
“They may deny it, but there is an internal freak-out going on in that company because they can’t be what they want to be.”
“They had to admit that doing the Abacus deal was sleazy…
“What that means, if you unwrap it, is that Goldman can’t do the Abacus deal again. You may think that that is an outlier. I don’t. I think that is the way Goldman does business. And if they can’t do the Abacus deal, that company is in for massive changes. And the company has to change at the top, too.”
That’s a big accusation, saying that the way Goldman does business is sleazy. He goes on to predict both Lloyd Blankfein’s and COO Gary Cohn’s leaving. Cohn, he thinks, might start a (successful) hedge fund.
“And Lloyd Blankfein isn’t too happy about his working there either these days.”
What happens to both execs will depend largely on how financial regulation is interpreted by banks, he says.
It sounds like Gasparino thinks everyone is looking to Goldman to see how they handle the changes. Banks always look to one another and follow their moves – once one bank moves, another and the next are usually right behind. An example is the recent spinning out of banks’ prop trading units.
But Goldman, says Gasparino, is the ring leader. They’ll decide how the new rules are ultimately written.
We are going to have to see exactly how financial regulation gets written; what Goldman does could be really interesting in terms of just how strict those rules are, how much the Lloyd Blankfein, Gary Cohn and the Darwinian nature of the firm has to change, and if that is the case the guys at the top will have to change.
So we have two big predictions from Gasparino here. Goldman will stop being sleazy, and top management is going to change soon at Goldman.
Both are probably just wishful thinking.