The rest of the market thought otherwise but Goldman has another interpretation.

Goldman will continue making principal investments with the firm’s own money because executives don’t think the so-called Volcker rule prevents the practice, a Bank of America Corp. analyst said. The analyst, Guy Moszkowski, published a note to investors today after meeting last week with four Goldman Sachs executives in Hong Kong. New York-based Goldman Sachs doesn’t think U.S. legislation passed last year that bans proprietary trading and limits holdings in hedge funds and private-equity funds precludes buying stakes in companies and other assets, Moszkowski wrote.

“The market interpretation of Volcker rules is that this will be off-limits ahead, but GS believes that many such investments will remain permissible, and will be closing on a ‘meaningful’ one in China shortly,” Moszkowski’s note said.

The investment is in Taikang Life Insurance, with a 12.02 percent stake. Thank you, Pedro!

Goldman Sachs Still Planning Principal Investments [Bloomberg]

Article courtesy of Dealbreaker

With the passing of the Dodd-Frank Bill, one pesky thing that banks have had to spent a couple hours getting in line with is the Volcker Rule, and what it means for their proprietary trading desks. Whether to spin them off, send the employees to a farm in the country where they can run around, move them to the basement or just rename the group the ‘troprietary prading’ unit, about which no one will be the wiser, the whole thing has been a bit of a headache. One person who hasn’t lost any sleep over the mandate, however, is Vikram Pandit. Because unlike his counterparts at say, Goldman, who’ve clutched their pearls and felt faint at the thought of a world without prop, Vickles got behind the rule before it was even a twinkle in Volcker’s eye.

“It’s all about clients,” Pandit told the New Yorker. The biggest mistake Citi and other banks made during the boom, he said, was coming to believe that investing and trading on their own account, rather than on behalf of their clients, was a basic aspect of banking. Even before the Dodd-Frank bill was passed, Pandit was closing down some of Citi’s proprietary businesses and trying to sell others. “Proprietary trading is not the core of what banking is about,” he said. In place of a business model that was largely dependent on making quick gains, he is trying to revive a banking culture based on cultivating long-term relationships with Citi’s customers. “Once you make your business all about relationships, conflicts of interest are not an issue,” he said.

Obviously he’s too modest to say it so we will: Vikram wasn’t just complying with the Volcker Rule before it was passed– Vikram invented the Volcker Rule, which shouldn’t even be called the Volcker Rule, it should be the Pandit Precedent, or something. Whatever. You’ll be hearing from his lawyers, Paul, you weasel. Tyler and Cameron Winkelvi know what we’re talking about.

Wall Street, Investment Bankers, And Social Good [New Yorker via Heidi Moore]

Article courtesy of Dealbreaker

RBS Faces `Long, Hard Slog’ as Hester Forecasts Reduced Loss (Bloomberg)
The loss for the year will be “nominal,” Chief Executive Officer Stephen Hester, 49, said on a conference call with journalists today, following a 3.6 billion-pound ($5.8 billion) loss in 2009. The third quarter net loss narrowed by 36 percent to 1.15 billion pounds from 1.8 billion pounds in the year- earlier period as impairments fell, RBS said in a statement…“There are inevitably clouds still out there on the horizon,” Hester said. “We still have our raincoats on.”

HSBC Profit Growth Slows, Sees ‘Bumps in the Road‘ (Bloomberg)
“Our latest data from emerging markets points to a slowdown in the rate of recovery and the likelihood of some bumps in the road ahead,” Chief Executive Officer Michael Geoghegan said in the statement. “We believe the long-term fundamentals for emerging economies are as compelling as ever.”

German Finance Minister: US Policy ‘Clueless’ (Reuters)
“With all due respect, U.S. policy is clueless,” Wolfgang Schaeuble said at a conference.

AIG Posts $2.4 Billion Loss (AP)
AIG lost $2.4 billion, or $17.62 per share, compared with earnings of $92 million, or 68 cents per share, a year ago.

Representative Bachus Warns Geithner On Volcker Rule (Reuters)
“If the Volcker Rule’s prohibitions are expansively interpreted and rigidly implemented against U.S. institutions while other nations refuse to adopt them, the damage to U.S. competitiveness and job creation could be substantial,” Bachus wrote in the November 3 letter to Treasury Secretary Timothy Geithner and other top regulators.

GM Touts Its Profit Potential In IPO Pitch (WSJ)
GM tells investors the company can generate $11 billion to $13 billion in annual pretax profit and profit margins of 7% to 8% as the North American auto market recovers, according to a video in the presentation by Chief Financial Officer Chris Liddell that was available Thursday on a website used by underwriters to distribute IPO information. Mr. Liddell says GM should be able to hit those targets as the industry moves up from the trough of 2009. When the car market is at its strongest, he says, GM will be capable of delivering pretax annual profit of $17 billion to $19 billion, with profit margins of 9% to 10%.

Octogenarian Finds Copper With China as Biggest Customer (Bloomberg)
In the snake-infested jungle of southeastern Ecuador, the American explorer David Lowell found himself sliding over a waterfall and heard his head bounce off a rock “like a melon being hit by a hammer,” he says. Lowell was 72 and prospecting for copper that day in May 2000. He stepped into the slippery streambed for a vantage point free of vipers and vines. A broken rib and throbbing head diverted him to a nearby hamlet in search of help. “There was one man in the village who was a combination chiropractor and mortician,” Lowell says. “We decided to just buy a little tin of liniment with the picture of a dragon on it.” The expedition carried on. In the clear water of the stream, Lowell saw enough to help him find one of South America’s richest copper deposits. This May, a joint venture of Chinese state-owned companies paid $652 million to buy Lowell’s partner in the exploration, Vancouver- based Corriente Resources Inc. Lowell kept a stake there for himself, though local opposition has prevented mining. In a career spanning six decades and 44 countries, Lowell has made 14 major discoveries, including the world’s largest copper deposit in Chile. He found treasures where others detected nothing worth mining. Lowell revolutionized exploration and unearthed metals that helped the U.S. build the world’s largest economy. He also made investors billions.

BlackRock Fund To Finance, Securitize US Mortgages (Reuters)
The $1 billion BlackRock Mortgage Investors Fund will provide capital for prime “jumbo” loans through lenders under strict underwriting guidelines, said Randy Robertson, a managing director and co-head of securitized products.

FrontPoint Cautioned Manager On Trades (WSJ)
FrontPoint Partners manager Joseph F. “Chip” Skowron, who has been put on leave pending the outcome of an insider-trading investigation concerning a biotechnology stock, was warned by supervisors about trading other securities he or others on his team discussed with a network of health-care advisers, said people familiar with the matter.

Spoonachos Are The Holy Grail Of Chips (Gizmodo)
Dare to dream.

Volcker: Future Inflation Risk Limits Easing Effect (Reuters)
Volcker told reporters after a lecture in Seoul that short-term U.S. interest rates had almost no room to go down further, while long-term bond prices were under pressure from increasing concern about future inflation.

‘Pay To Play’ Guilty Plea Expected (WSJ)
Henry “Hank” Morris, who was an adviser to former New York Comptroller Alan Hevesi, was accused by the state’s attorney general, Andrew Cuomo, in March 2009 of taking kickbacks disguised as “placement” fees in exchange for arranging business for investment firms from New York’s $125 billion Common Retirement Fund, one of country’s largest public pension funds. [He] has agreed to plead guilty to a felony in the long-running corruption investigation, people familiar with the situation said.

Banks Face $31 Billion Loss on Mortgage Buybacks (NYT)
So sayeth Standard & Poor’s.

HSBC Says British Remuneration Rules Hurt Hiring (Dealbook)
HSBC finds it increasingly difficult to compete for talent with banks from the United States and local rivals in Asia, Stuart T. Gulliver, chief executive of HSBC’s investment banking business, said Friday. “We’re competing against the local banks and against the American banks, which are not subject to the same remuneration rules, which means we simply can’t pay what these guys are paying,” Mr. Gulliver, who is set to take over as chief executive of HSBC this year, said on a media call about the banks’ third-quarter earnings.

Article courtesy of Dealbreaker

Nothing’s been decided yet but they’re thinking things over at 200 West, lots and lots a things. Maybe they’ll spin the unit into its own hedge fund. Maybe they’ll move the prop team into the basement and keep them locked in there, like the third Olsen sister no one knows about. Eventually people will forget, until they’re discovered, years later, in a raid by the NYPD. Maybe they’ll do nothing (best place to hide is in plain sight). CNBC’s Kate Kelly reports:

Goldman is seriously considering spinning off its proprietary trading unit or a significant portion of it as early as this month. They will take that unit out of the major bank and put it into another entity. Now details are not entirely clear. There are a couple of options on the table. One thing that Goldman and other banks are considering…is to seed a hedge fund staffed by former Goldman Sachs proprietary traders with Goldman money and replace it in the coming years with third party money. Another possibility is to potentially move it into their asset management unit and own the management but not seed it with Goldman money. They might also be moving some people around in Europe from London to Zurich where they have leased some office space…so they are playing with a bunch of different scenarios to deal with the tax situation in the UK as well as the Volcker rule in the US.

Article courtesy of Dealbreaker

Paul Volcker, President Obama’s special advisor on financial regulatory reform, appears to have endorsed the main bill sponsored by Sen. Chris Dodd of Connecticut. Although details are still being worked out, Congress is moving to pass the bill by the end of the month.

From FBN:

“I think the Dodd Bill has some essential elements and some of them haven’t been fully resolved including I guess the so-called Volcker Rule that’s under consideration today. I don’t know where it stands at the moment. I think it does include the really essential elements that we need. The central issue behind all this is ‘too big to fail’ and moral hazard.”

“It certainly has a mechanism that the expectation of ‘too big to fail’–I can’t say go away – but it has a mechanism to deal with that big question. I think it can deal with it effectively, yes.”

On backlash against separating prop-trading:

“Few of our banks have any real significant activity in proprietary trading. There are a very tiny group of banks that are worried about it. The problem goes back to ‘too big to fail.’ There is an elaborate arrangement for decades for protecting banks. I want to make a separation between the activities that are protected and shouldn’t be protected. That’s the heart of the matter.”

Article courtesy of Dealbreaker

In case you missed it, here’s Lloyd Blankfein’s first extended television interview in, well, we can’t remember how long. Goldman has long been a firm that refused to answer most journalists’ questions and usually gave a “no comment” to interview requests, even the most innocuous ones.

But, as Lloyd told Charlie Rose on Friday, the firm is doing some “soul searching.” He conceded the firm’s longstanding strategy of not engaging with the public was “probably a mistake.” (Secretive hedge funds take note.) That strategy sowed a misunderstanding among the public at large about what the firm actually does, he said.Well, it’s taken a financial meltdown, civil fraud allegations and, most importantly, a big drop in its stock price for Goldman to finally realize it needs a better way of telling its story. It recently hired Mark Fabiani, a crisis management expert who was a special counsel to President Bill Clinton, to help repair its image.

“We’re very important but the public doesn’t see that,” Blankfein said on the show. “There are ways in which I can do a better job of informing people about markets and what we do and the contribution we make. We have to be more transparent.”

On the Volcker Rule, Blankfein said it would only affect about 10 percent of the firm’s revenues. “If we eliminated all the activity that’s unrelated to client activity at Goldman Sachs, it would probably do away with about 10 percent of our revenue,” he said. Also, forget any notion of Goldman reverting back to a private partnership, as some have suggested, because it needs access to permanent capital, Blankfein said on the show.

In addition to the strong support from Warren Buffett, the negative publicity doesn’t seem to have affected Goldman’s client business. It advised, along with JPMorgan, on United’s $3 billion merger with Continental and it’s advising, and providing financing, for Pearson’s $3.1 billion sale of its Interactive Data unit.

Article courtesy of Dealbreaker