From Botched IPOs to Libor Manipulation: Goldman Sachs Isn't the Only Bank Labeled as a Vampire Squid
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If there was an 'I Hate Financial Companies and Banks Index', most investors might have assumed that Bernie Madoff's multi-billion dollar Ponzi scheme would have been the low point. Unfortunately, contrarian investors in our hypothetical hate index who attempted to call a bottom in sentiment would have had their butts handed to them, since hate and distrust in banks and financial institutions continues to post new lows on nearly a daily basis. Distrust of banks has become so profuse that recent headlines about bank manipulation of the Libor rate is almost a nonevent. The reality is that it is a huge breach of trust, but to many it just seems like business as usual. I mean, considering recent events is anyone really surprised? Here is a summary of how ridiculous the banking industry has become.
Tempest in a Teapot
The fact that a bank in the U.S. would lose money 'hedging' shouldn't have made headlines. However, when JPMorgan’s (NYSE: JPM) CEO Jamie Dimon reassured investors that trading losses at the bank were a "tempest in a teapot", only to reveal later that the losses were really $2 billion and growing, it had investors shaking their heads in disgust. Those losses have now grown to $4-$6 billion.
Facebook (FB) a Great America Success Story
Facebook might yet turn out to be a true success story, but for investors who were snookered into investing in the company's IPO, success is not the word that comes to mind. Ridiculous is probably a better word to describe the botched Facebook IPO. As if technical glitches at Nasdaq weren't bad enough, the fact that Morgan Stanley priced the IPO well above the known valuation is really inexcusable. With a $38 opening price, every insider knew shares of Facebook were going to go straight into the toilet, and that is exactly what happen, and it took retail investor sentiment with it.
The Vampire Squid Goes on the Hunt for Muppets
The fact that a former employee at Goldman Sachs (NYSE: GS) called the company a giant vampire squid on the face of humanity wasn't really a surprise. What was surprising was how easy it was to prove it. I mean, shouldn't a company with the prestige of Goldman Sachs at least make a pretense of sincerity? Nope. Instead they blatantly went about their business while nonchalantly calling their best clients "Muppets".
Don't Blame Banks, Blame the Robots Working at Banks
Robo-signing sounds like an interesting way for banks to make a few bucks, but when it was revealed that banks were kicking families to the curb without even reviewing foreclosure documents – let’s just say this ruffled a few feathers. It didn't help housing prices bottom either. Instead we got to learn another interesting sounding phrase – shadow inventory.
The examples listed above are just a few of the many reasons why citizens around the globe have an ever increasing hatred for banks. Considering the context, the fact that Barclay's colluded with other large banks to manipulate the Libor rate is a surprise, but it isn't as shocking as it would have been a few years ago. More and more, scandals are becoming the norm at banks, and more and more investors, customer, and citizens are growing nostalgic for the good old day when guillotines were all the rage.
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Tempest in a Teapot
The fact that a bank in the U.S. would lose money 'hedging' shouldn't have made headlines. However, when JPMorgan’s (NYSE: JPM) CEO Jamie Dimon reassured investors that trading losses at the bank were a "tempest in a teapot", only to reveal later that the losses were really $2 billion and growing, it had investors shaking their heads in disgust. Those losses have now grown to $4-$6 billion.
Facebook (FB) a Great America Success Story
Facebook might yet turn out to be a true success story, but for investors who were snookered into investing in the company's IPO, success is not the word that comes to mind. Ridiculous is probably a better word to describe the botched Facebook IPO. As if technical glitches at Nasdaq weren't bad enough, the fact that Morgan Stanley priced the IPO well above the known valuation is really inexcusable. With a $38 opening price, every insider knew shares of Facebook were going to go straight into the toilet, and that is exactly what happen, and it took retail investor sentiment with it.
The Vampire Squid Goes on the Hunt for Muppets
The fact that a former employee at Goldman Sachs (NYSE: GS) called the company a giant vampire squid on the face of humanity wasn't really a surprise. What was surprising was how easy it was to prove it. I mean, shouldn't a company with the prestige of Goldman Sachs at least make a pretense of sincerity? Nope. Instead they blatantly went about their business while nonchalantly calling their best clients "Muppets".
Don't Blame Banks, Blame the Robots Working at Banks
Robo-signing sounds like an interesting way for banks to make a few bucks, but when it was revealed that banks were kicking families to the curb without even reviewing foreclosure documents – let’s just say this ruffled a few feathers. It didn't help housing prices bottom either. Instead we got to learn another interesting sounding phrase – shadow inventory.
The examples listed above are just a few of the many reasons why citizens around the globe have an ever increasing hatred for banks. Considering the context, the fact that Barclay's colluded with other large banks to manipulate the Libor rate is a surprise, but it isn't as shocking as it would have been a few years ago. More and more, scandals are becoming the norm at banks, and more and more investors, customer, and citizens are growing nostalgic for the good old day when guillotines were all the rage.
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*NEW - Download StreetInsider's FREE iPhone and iPad App - Click Here
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