Wednesday, April 28, 2010

Goldman Sachs Congressional Hearing Video 1 [Tourre, Birnbaum, Sparks, Swenson]

This hearing was actually very boring. The Goldman Sachs employees (former) managed risk pretty well though during the hearing. Here is the video with CEO Lloyd Blankfein, CFO David Viniar and Chief Risk Officer Craig Broderick. Goldman should start a reality show.

Joshua Birnbaum: Former Goldman Sachs Managing Director, Structured Products Trading
Daniel Sparks: Former Goldman Sachs Department Head, Mortgages
Michael Swenson: Goldman Sachs Managing Director, Structured Products Trading
Fabrice Tourre: Goldman Sachs Executive Director, Structured Products Trading




I think these illiquid, over-the-counter debt deals with zero price transparency, that rely solely on credit ratings to price risk, need to go. Seriously a bank should originate debt securities just like an illiquid micro-cap stock, offer it to the public and make markets on a public exchange. Check out Secondmarket.com (a secondary market for illiquid assets), I think it's an interesting concept. The bigger the market gets, the more efficient it will be. It would be an avenue for banks, institutions, hedge funds and high net worth individuals to buy or unload illiquid assets with less marketability risk and better pricing.

Also mortgages should be traded like bonds, moving inversely with housing prices. Read this article by George Soros at WSJ.com in 2008 - Denmark Offers a Model Mortgage Market. Cut the BS!

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