Goldman Sachs Group Inc., the U.S. bank that relies on fixed-income trading for the largest portion of its revenue, will shut its Global Macro Proprietary Trading desk, a person with knowledge of the decision said.
The eight-person desk, which trades currencies and stocks as well as products tied to interest rates and other fixed- income markets, will close in the days ahead, said the person, who declined to be named because the decision wasn’t public. Stephen Cohen, a spokesman for New York-based Goldman Sachs, declined to comment.
“Keeping the prop business going will have little benefit and closing it will be seen as a positive move to comply with Dodd-Frank,” said Christopher Wheeler, a London-based analyst with Mediobanca SpA, who has a “neutral” recommendation on Goldman Sachs.
Morgan Stanley and JPMorgan Chase & Co. are among Wall Street firms breaking off or winding down such trading units to comply with the Volcker rule, a provision of the Dodd-Frank financial law that prohibits banks from betting capital for their own accounts. The intent was to avert losses that might cause the collapse of firms and the financial system.
The group reported results as part of Goldman Sachs’s fixed-income trading division, the person said. That division generated revenue of $13.7 billion in 2010, 35 percent of the firm’s total.
The Wall Street Journal reported the decision to close the trading desk yesterday.
Goldman Sachs last year shut down an equity proprietary- trading group, Goldman Sachs Principal Strategies, to comply with the Volcker rule. Pierre Henri Flamand, the former head of Goldman Sachs’s Principal Strategies group, retired last year to start his own hedge fund.
The bank said on Jan. 19 that earnings dropped 52 percent in the fourth quarter, its third straight quarterly decline.
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Goldman Sachs is robbing and thieving the American sucker...
Archive Video - Dylan Ratigan on Goldman's profit miracle
Goldman's stock is up 155% since March, and the company netted $3.4 billion in profits last quarter, quadrupling it's earnings from a year ago. How did they do it?
- "Through magic, we will show how a single investment bank can make more than $3 billion in cash in 3 months time and create absolutely NO VALUE as unemployment skyrockets, foreclosures soar and the dollar collapses."
The short answer is they used $70 billion from taxpayers to acquire assets on the cheap during the crisis last fall when very few others had access to capital and the deals were hot, and now the asset prices have recovered in value:
- "Goldman Sachs is getting rich on the back of the American taxpayer."
- The question is not why did we bail out the banks. The question is why did we give the banks billions of our money so they could then buy assets by the trillions with our money and they keep the profits?
The answer is Henry Paulson, former Goldman Sachs CEO who ran the US Treasury, and Tim Geithner, current Treasury Secretary who at the time ran the New York Federal Reserve, willingly delivered Goldman Sachs the $70 Billion --with no strings attached.
So what can we do?
- We must demand the return of those investment gains made with America's money - it was stolen from us and we can get it back. Demand Claw Backs - and not from the future but from the past - That is where our money is.
- We must have an exchange for all credit derivatives -- the current version is riddled with loopholes that let banks avoid transparency by mobbing offshore and prohibiting government regulators from being able to force the use of the exchange by the banks.
The Goldman Sachs bailout breaks down as follows:
- $10 billion from TARP
- $11 billion from the Federal Reserve
- $30 billion from the FDIC
- $13 billion from AIG
