From Bloomberg: Sitting onstage in Washington’s Ronald
Reagan Building in July, Lloyd C. Blankfein said Goldman Sachs Group Inc. (GS)
had stopped using its own money to make bets on the bank’s behalf.
“We shut off that activity,” the CEO told more than 400
people at a lunch organized by the Economic Club of Washington, D.C., slicing
the air with his hand. The bank no longer had proprietary traders who “just put
on risks that they wanted” and didn’t interact with clients, he said.
That may come as a surprise to people working in a secretive
Goldman Sachs group called Multi-Strategy Investing, or MSI. It wagers about $1
billion of the New York-based firm’s own funds on the stocks and bonds of
companies, including a mortgage servicer and a cement producer, according to
interviews with more than 20 people who worked for and with the group, some as
recently as last year. The unit, headed by two 1999 Princeton University
classmates, has no clients, the people said.
The team’s survival shows how Goldman Sachs has worked
around regulations curbing proprietary bets at banks….
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