Rich Guys Club

A research firm has a memo to big banks on derivatives reform: Be afraid, be very afraid.

At the NYT’s Dealbook, Cyrus Santi has word of a rather staggering new report by Bernstein Research which projects that Goldman Sachs could see a 41 percent drop in earnings if strict derivatives reform moves through Congress. The total, per Santi’s calculations, would be equivalent to $3.9 billion hit to Goldman Sachs last 12 months of income.

President Obama has effectively drawn a line in the sand on the issue of reining in Wall Street’s barely regulated derivatives trade, indicating he’d veto any bill that doesn’t address the issue. The question, of course, is just how strict derivatives reform will be.

Read More: -the Huffington Post

Democrats took a step toward their goal of overhauling financial regulation, reaching a tentative deal to set restrictions on trading in exotic financial instruments known as derivatives.

Among the considerations still in the balance: A big provision being sought by Warren Buffett in recent weeks. A key Senate committee had changed its proposed overhaul of derivatives regulation after lobbying by Mr. Buffett’s Berkshire Hathaway Inc., potentially helping the famed investor avoid a financial hit, congressional aides say.

Sunday night’s deal, hammered out by Senate Banking Chairman Chris Dodd (D., Conn.) and Senate Agriculture Chairwoman Blanche Lincoln (D., Ark.) reflects the populist, anti-bank sentiments simmering on Capitol Hill. A Senate Democratic official said the two have “worked out a deal,” which is expected to be folded into a broader Democratic measure that revamps the U.S. system of financial regulation in the wake of the catastrophic financial collapse that occurred in 2008. The agreement includes a proposal that could force banks to spin off their lucrative derivative trading operations, reshaping Wall Street.

The fate of Berkshire’s effort to influence the legislation remains uncertain. Senate officials said Sunday night that most of the details of the agreement haven’t yet been finalized.

Read More: – By Damian Paletta and Scott Paterson, the Wall Street Journal

“The system is built to be gamed.”

“The voices of dissent are not being heard.”

These are the words of an anonymous executive at one of America’s 10 largest banks, who after many years of watching the worst of Wall Street’s ethics transform his company, has decided to speak out.

Despite the obvious risks to his banking career, the executive, who’s been in the industry for more than 20 years, says he can’t bear to keep quiet any longer: “I decided that I cannot live with the extent of the compromises to my value system.”

Read More: – Ryan McCarthy, Huffington Post

Goldman Sachs Group Inc (GS.N) was sued on Monday by a large union pension fund that accused the Wall Street investment bank of overpaying its executives.

The International Brotherhood of Electric Workers fund filed the lawsuit in Delaware Chancery Court, seeking to recover money for the company on behalf of other shareholders.

It seeks to stop Goldman from allocating roughly 47 percent of 2009 net revenue as compensation, saying such allocations “vastly overcompensate management and constitute corporate waste.”

The lawsuit also wants Chief Executive Lloyd Blankfein and others in management, rather than shareholders, to be responsible for charitable contributions that Goldman is making as a an apology for its activities.

Read More: – Reporting by Jonathan Stempel and Steve Eder, Reuters

Harry Shearer has been a comedic icon for over thirty years, but you might not recognize him by his face. Shearer helped to invent the mockumentary with his movie Spinal Tap, but most people probably know him by his voice. Shearer provides the voice of many Simpson characters, including the aged tycoon, Mr. Burns.

And who better to take financial advice from than Mr. Burns.

Read More: – By Dan Evon, IndyPosted

Wall Street tactics akin to the ones that fostered subprime mortgages in America have worsened the financial crisis shaking Greece and undermining the euro by enabling European governments to hide their mounting debts.

As worries over Greece rattle world markets, records and interviews show that with Wall Street’s help, the nation engaged in a decade-long effort to skirt European debt limits. One deal created by Goldman Sachs helped obscure billions in debt from the budget overseers in Brussels.

Even as the crisis was nearing the flashpoint, banks were searching for ways to help Greece forestall the day of reckoning. In early November — three months before Athens became the epicenter of global financial anxiety — a team from Goldman Sachs arrived in the ancient city with a very modern proposition for a government struggling to pay its bills, according to two people who were briefed on the meeting.

Read More: – By Louise Story, Landon Thomas Jr, and Nelson D. Schwartz, the New York Times

The bull is breathing all over Wall Street.

A little more than a year after Merrill Lynch was officially swallowed by Bank of America, many of the executives of the once storied Wall Street firm — which used the animal that is synonymous with rising stock markets as its mascot — have landed in leadership positions around the financial world.

On Monday, John Thain, who was Merrill’s chief executive when the firm sold to BofA, got the top job at troubled lender CIT. Thain said he was interested in the opportunity to revitalize the small-business lender. “CIT can and will serve an important role in the recovery of the U.S. economy and the creation of jobs,” Thain told reporters.

Read More: – by Stephen Gandel, Time

Does anyone really believe a little populist outcry will make Goldman Sachs crawl under a rock?

The New York investment firm has come under attack as the backlash against bank bailouts builds. Long associated with uncanny trading profits, huge bonuses and political connections, Goldman (GS, Fortune 500) lately has become the face of Wall Street venality.

Not everyone buys into this logic, though. So with each plan to rein in the big banks, the market drumbeat grows for Goldman to take its ball and go home. The firm should relinquish its New York Stock Exchange listing and return to a partnership structure, according to one popular theory.

But as much as CEO Lloyd Blankfein might like to restore Goldman to a state of richly compensated obscurity, it is unlikely to flee the stock market. Doing so would hardly silence the firm’s many critics and, more important, could hurt business.

Read More: – by Colin Barr, senior writer, Fortune

Gordon Gekko, that cutthroat swashbuckler of a corporate raider who once sneered “Lunch is for wimps,” is holding sway over a table at a jammed Manhattan restaurant.

No, it’s not an ’80s flashback but a scene being shot for Wall Street: Money Never Sleeps, a sequel to the 1987 original due this spring that takes place more than 20 years later.

Instead of the ambition-served-raw atmosphere of the 21 Club depicted in the first film, the locale is Shun Lee, an Upper West Side institution where decorative demon-eyed monkeys dangle above the bar like mute witnesses. And rather than coercing a would-be high-stakes player into doing his shady bidding, Gekko is focused on reconnecting with Winnie, his estranged daughter whom he hardly knows after serving a hefty 14-year jail sentence for insider trading.

Just as he’s about to seal the deal emotionally, he spies a familiar figure heading his way: Graydon Carter, the woolly-haired gatekeeper of Vanity Fair. He gets up and greets the editor: “It’s Gordon. Gordon Gekko. Congratulations. Love the work you’re doing.”

Read More: – By Susan Wloszczyna, USA Today