Goldman's Lawsuit: Yes, Men dominate the firm: Look at the numbers

Yesterday morning, my inbox filled with emails about the new Goldman Sachs sexual-discrimination lawsuit. Some asked questions—you were there, you're a woman, what's your take? Others revealed information. As a former Goldman managing director, let me say this: While I don't know the three women filing the suit, I'm not surprised by it.

You don't have to look further than the numbers to see an obvious power bias towards men. Start with the fact that the executive committee only has one woman on it, and work backwards...(about half the entering analysts are women, not so as you rise through the ranks - whether intentional or primal, the results are clear.)  

I wrote the rest of my thoughts about this for The Daily Beast.

Second Anniversary: Fannie & Freddie Government Protection Program

It's hard to believe, given the incompatible realities of the anemic economy and the stalwart insistence of the Federal Reserve, Treasury Department and Andrew Ross Sorkin that things would have been so much worse without the bailout, that it was exactly two years ago that the government first moved to subsidize the ailing government sponsored entities (GSE's), Fannie Mae and Freddie Mac, whose stock prices now hover at around 30 cents. 

Yet, today marks the second anniversary of that first step in what became a multi-trillion dollar bailout and subsidization of the entire financial sector. On Sunday, September 7, 2008, the government announced it would buy $200 in preferred stock in Fannie and Freddie (their stock prices subsequently plunged as trading opened on September 8, 2008), followed by another $200 billion round of purchasing in February, 2009. As a quiet Christmas Present last year, Treasury Secretary, Tim Geithner, raised the cap on how much stock the government could purchase to keep the entities afloat - from $200 billion a pop, to - ready for it? - an unlimited amount.

In the past two years, the Treasury Department has explicitly purchased $220 billion of mortgage-backed securities (MBS). It has increased guarantees for the Government National Mortgage Association (GNMA) to $398.4 billion and for the Federal Housing Authority to $365.9 billion. The Fed has bought another $1.4 trillion of GSE mortgage backed securities. And, according to the July Sigtarp report, the government is providing an implicit guarantee of $5.5 trillion for Fannie/Freddie and $1.3 trillion for the Federal Home Loan Bank (FHLB).

Considering that the balance of sub-prime loans at these agencies was only about half a trillion dollars worth, it would seem that this method of excessive, strategy-devoid subsidizing remains - well - haphazard, expensive, and reckless. Far more efficient and economical would be extracting the non-performing loans from their securitized container and forcing their restructuring to benefit the borrower and thus, the related security in which that loan lives, rather than throwing a whole pile of money at the general entity without pinpointing and separating of the worst loans, and thus, providing a more cost-effective remedy to the problem.

Since almost everyone's mortgage lives somewhere within the GSE framework, it's in all of our best-interests to find a solution. This kind of bottom up approach to bailing out and subsidizing has always made more financial sense - to me, anyway. 

Lies my Fed Chairman told me

I've often wondered whether Fed Chairman, Ben Bernanke, believes his own hype, or if he is just so personally and professionally invested in perpetuating the story of the success of the greatest bailout ever compared to the most heinous of consequences that would have befallen us without it, that it doesn't matter.  

Either way, I cringed a little inside when he told the Financial Crisis Inquiry Commission this morning, 

"The single most important lesson of this crisis is we have to end the 'too big to fail' problem."

This coming from the man who, sat at the helm of the Fed in the fall of 2008, and approved without any conditions or questions, as per the Fed charter that equally provides for rejecting:

- The acquisition of Bear, Stearns and Washington Mutual by JPM Chase - making a big bank, bigger

- The acquisition of Merrill Lynch by Bank of America - making a big bank, bigger

- The acquisition of Wachovia by Wells Fargo - making a big bank, bigger

- The re-classification of Goldman Sachs and Morgan Stanley into bank holding companies - making the arena of big banks, riskier

Of course, no one on the commission asked probing questions about those brainiac decisions and how or why other alternatives weren't considered, particularly given the substantial government subsidies these institutions enjoyed on the way to becoming bigger and more Fed co-dependent. No one asked specifics of what the remaining subsidies to Wall Street still are. No one asked Bernanke what he meant when he implied that the new so-called financial reform bill would reduce the possibility of too-big-to-fail in the future,  given that the Fed totally ignored the fact that 3 of the institutions above subsequently surpassed or hit the already existing 10% concentration limits that had been designed to keep a lid on the notion of 'too-big' to begin with, and given the fact the the Fed either by itself, or in its position beside the Treasury Secretary on the new Financial Oversight Council, can override most future bailout decisions anyway.

Yet, we are supposed to believe that Bernanke is concerned about 'too big to fail? Really??