Goldman Sachs is like the Regina George of Wall Street. For years it was the richest, the most beautiful, the most popular bank. But it was also the meanest, the most likely to tell you to your face that your ideas were really good and then go, “That guy’s a moron” as soon as you were out of earshot. Goldman Sachs was fabulous, everyone agreed, but it was also evil. Thus, while everyone on the Street was in thrall to Goldman — wanted to be Goldman — they also feared and loathed them. Which is why some couldn’t help but feel a tickle of schadenfreude late last week, when the SEC came along and hit Goldman with a surprise lawsuit late last week, even though all agreed it was a sad thing and generally not good for the industry. Among these people is apparently Citi’s chief financial officer, John C. Gerspach, who could not resist bringing up the situation on his bank’s earnings call this morning. “Let me be clear about one issue that has attracted a lot of attention since Friday,” he said, in what was according to DealBook, an “impromptu remark.”
“So let me state the following: Citi is not involved in the matter the S.E.C. announced on Friday.”
Clearly, what Gerspach was expecting people to say was “Yay!” or at least “Duh.” But that didn’t happen. Instead, it kind of backfired, as the conversation quickly turned to the skeletons that might be in Citi’s closet.
Clearly, what Gerspach was expecting people to say was “Yay!” or at least “Duh.” But that didn’t happen. Instead, it kind of backfired, as the conversation quickly turned to the skeletons that might be in Citi’s closet.
For instance, sure, they might not have anything to do with this, but what kind of legal action might they be facing in the future, analysts wanted to know. Gerspach, wishing he’d never said anything, tried to get off the phone.
“It has been widely reported that the S.E.C., among other regulators, is conducting an industrywide investigation into a wide range of subprime-related issues,” Mr. Gerspach said. “As we disclosed in our 10-K, we are fully cooperating with these investigations, and it would not be appropriate for us to comment further.”
But that wasn’t enough for UBS analyst Glenn Schorr.
“Do you have any Wells notices outstanding?” Mr Schorr asked, referring to a letter that the S.E.C.sends to companies when it is considering bringing an enforcement action. “I feel like I am supposed to ask every company I cover that now,” he said.
Citi Distances Itself From Goldman’s Troubles [Dealbook/NYT]
