September 30, 2022

Lloyd Blankfein Does Fair Value

Thumbnail image for buffet-and-blankfein.jpgEditor’s Note: Want more JDA? You can see all of her posts for GC here, her blog here and stalk her on Twitter.
It’s official, I’m sick of hearing “experts” weigh in on fair value. After my anti-PCAOB rant earlier this week, I thought I’d heard all there was in terms of the fair value argument.
Leave it to Goldman Sachs’s fearless leader to pull this little rabbit out of his hat and shock the shit out of me. In a Financial Times op-ed earlier this week, Blankfein doesn’t directly toot Goldman’s horn, though anyone who knows the lotion in a sock trick might recognize this as a blatant jerk-off.


For a man whose institution lurks in the cesspools, erm, dark pools, Blankfein is awfully incredulous as he criticizes both regulators and institutions for slacking on their valuations. GS calculates the fair value of their positions daily? Christ, no wonder they’re making buckets of cash.
FT:

It is not enough even that all exposures be identified. An institution’s assets must also be valued at their fair market value – the price at which willing buyers and sellers transact – not at the (frequently irrelevant) historic value. Some argue that fair value accounting exacerbated the credit crisis. I see it differently. If institutions had been required to recognise [British sic] their exposures promptly and value them appropriately, they would have been likely to curtail the worst risks. Instead, positions were not monitored, so changes in value were often ignored until losses grew to a point when solvency became an issue.
At Goldman Sachs, we calculate the fair value of our positions every day, because we would not know how to assess or manage risk if market prices were not reflected on our books. This approach provides an essential early warning system that is critical for risk managers and regulators.

FT’s own John Gapper even gets in on the Goldman fapfapfap, defending their practices as not exactly illegal, just really, really clever.

Its run of success since its 1999 initial public offering has not been based on “pump and dump” broking but on sticking obstinately to the institutional, less-regulated elite end of the market.
One rival Wall Street executive describes Goldman (with rueful admiration) as “a bunch of clever thugs”. He means that Goldman has been tough about seizing profitable opportunities even if that involves, for example, bidding for an asset against a former client.
Whatever Goldman is doing to make money, it works.

Crack dealers and prostitutes also make a lot of money but that doesn’t make it right. Just sayin.

Thumbnail image for buffet-and-blankfein.jpgEditor’s Note: Want more JDA? You can see all of her posts for GC here, her blog here and stalk her on Twitter.
It’s official, I’m sick of hearing “experts” weigh in on fair value. After my anti-PCAOB rant earlier this week, I thought I’d heard all there was in terms of the fair value argument.
Leave it to Goldman Sachs’s fearless leader to pull this little rabbit out of his hat and shock the shit out of me. In a Financial Times op-ed earlier this week, Blankfein doesn’t directly toot Goldman’s horn, though anyone who knows the lotion in a sock trick might recognize this as a blatant jerk-off.


For a man whose institution lurks in the cesspools, erm, dark pools, Blankfein is awfully incredulous as he criticizes both regulators and institutions for slacking on their valuations. GS calculates the fair value of their positions daily? Christ, no wonder they’re making buckets of cash.
FT:

It is not enough even that all exposures be identified. An institution’s assets must also be valued at their fair market value – the price at which willing buyers and sellers transact – not at the (frequently irrelevant) historic value. Some argue that fair value accounting exacerbated the credit crisis. I see it differently. If institutions had been required to recognise [British sic] their exposures promptly and value them appropriately, they would have been likely to curtail the worst risks. Instead, positions were not monitored, so changes in value were often ignored until losses grew to a point when solvency became an issue.
At Goldman Sachs, we calculate the fair value of our positions every day, because we would not know how to assess or manage risk if market prices were not reflected on our books. This approach provides an essential early warning system that is critical for risk managers and regulators.

FT’s own John Gapper even gets in on the Goldman fapfapfap, defending their practices as not exactly illegal, just really, really clever.

Its run of success since its 1999 initial public offering has not been based on “pump and dump” broking but on sticking obstinately to the institutional, less-regulated elite end of the market.
One rival Wall Street executive describes Goldman (with rueful admiration) as “a bunch of clever thugs”. He means that Goldman has been tough about seizing profitable opportunities even if that involves, for example, bidding for an asset against a former client.
Whatever Goldman is doing to make money, it works.

Crack dealers and prostitutes also make a lot of money but that doesn’t make it right. Just sayin.

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Are Today’s Accountants Already Occupying Wall Street?

Caleb and I had a talk last night and it made me think about this whole Occupy Wall Street thing. More importantly, it made me think about what I am and am not doing to support it. I haven’t been to a rally, even to take pictures (last time I tried to do that, I was the only one out in front of the Federal Reserve Board at 6 in the morning except for the lone Fed cop patrolling the perimeter).

I get that people are pissed off. I’m pissed off too. I’ve been pissed off, don’t tell me about being pissed off. I was lugging around aFed sign made on top of “Ron Paul ’08” acrylic three years ago, you don’t have to tell me about being pissed off. (Here I am in 2009 on SF Citizen in a “Bernanke 00%” t-shirt at an anti-Iraq war rally)

And I get that for some people, all there is to do is go downtown with a drum and some poorly-written signs on cardboard ripped from your mom’s Costco packages in the recycle bin. That’s totally fine, everyone has their own way of sticking it to the man.

For a lot of Going Concern readers, sticking it to the man means showing up every day in business casual pretending to give a fuck about COSO but actually knowing that it’s all a lie. They work you to the bone until you leave or submit and get promoted to manager. Partner if you’re lucky. Run on that hamster wheel, here have this bonus, keep going and one day you can beat your own subordinates into submission. Go, go, go… Many of you get that this is bullshit but keep showing up every day anyway, and to me, you are your own special kind of protester. Same as last year, motherfucker, it’s the ultimate form of rebellion.

Too much?


Point being, everyone has their own way of screwing the establishment. Francine does it railing against the Big 4. Bill Sheridan and Tom Hood do it at the MACPA with professionalism. Tom Selling does it by riling up fellow academics. Professor Dave Albrecht does it by being seen in public canoodling with known incendiaries like yours truly.

I do it by ripping on the IASB as often as I am allowed to, infiltrating the Hill to sniff out what’s the latest in CPA lobbying efforts and getting in as many F bombs as I can on the dry subject of accounting. That’s all I can do. I can’t abandon my day job to hang out in Manhattan eating vegan paninis. I can make and distribute offensive Bernanke fridge magnets.

I completely understand why people are attracted to Occupy Wall Street; the part I’m struggling with is why so many of the 99 Percenters seem obsessed with this thing called “fairness” that does not, in fact, exist. Is it fair that any of us have to drag our asses to work every day and do what we do? Is it fair that Becker costs $3,000 and doesn’t pass the CPA exam for you? Is it fair that many of you are drowning in student loan debt and seemingly forced to get Master’s degrees just to work in your field? Is it fair that Caleb gets listed in all the accounting publications and I’m stuck as the sidekick hack who always manages to piss people off? This world is unfair, sorry to be the bearer of bad news. I have to write about accounting every day of my life, it’s un-fucking-fair, we get it.

In my view (for whatever that is worth, which is probably not more than our company pays me to write this post), the ultimate rebellion is assimilating and infiltrating the establishment to enact real change from the inside. Are partners scared as shit of this website? Yes. If they’re threatening you with termination if you even dare to write us for advice, we’re doing something right. And I didn’t even have to not shave my armpits to accomplish that (but Caleb probably shaved his).

Are any of you going to independently revolutionize the accounting industry? Probably not. But collectively, you have scared the pants off of lazy ass recruiters and partners across this country who thought you didn’t have it in you. They read us because they feel like they have to or else they’ll lose touch with what you guys are thinking, and it scares the living shit out of them. In my mind, that’s a far more effective message to send the The Establishment, whoever the hell they are.

I fully support the fundamental sentiment of Occupy Wall Street but much prefer fulfilling my incendiary duties here trying to get accounting kids riled up and questioning why they put up with the shit they do. Working mothers in public accounting should be allowed to have children. Interns should be allowed to ask questions (even dumb ones). Auditors should be expected to question last year’s logic. It’s not complicated but it’s important work that a lot of you do, and I hope that you get that.

It is not your fault that we’re here. Many of you just followed the rules.

Thanks for letting me be a part of that. Beats standing around with a fucking sign, that’s for sure.

Earlier:
Wanted: Accountants for Large Protest; Organizational Skills and Experience with Anything Slightly Resembling a Expense Reimbursement Policy a Plus [GC]