Richard Bove: Goldman Sachs Execs Will Be Ousted Over Their 'Ineptitude'

BOSTON (AP) -- Senior executives of Goldman Sachs Group Inc. are likely to be ousted because of their "ineptitude" in responding to government allegations that the investment bank misled investors, a Rochdale Research analyst said on Monday.

Analyst Richard Bove, however, maintained a buy rating and a $200 price target on Goldman's stock, saying he still is refusing to sell the recently battered stock. He wrote in a research note that Goldman "is likely to be supported even more strongly by its clients" following the bad publicity the company has suffered over the April 16 Securities and Exchange Commission complaint and subsequent congressional hearings.

But Bove said the company has hurt itself by saying "as close to nothing as possible" in response to the allegations.

"Goldman is going to have to pay a high price for its ineptitude in handling this issue," Bove said. "Its shareholders already have."

The stock closed Monday up $4.30, or 3 percent, at $149.50. But shares are down 20 percent from their high on the day the SEC complaint was announced April 16.

"Goldman has simply been outclassed at every step, and there is no sign that the company knows how to deal with the current situation," Bove wrote.

Without citing names of individuals such as CEO Lloyd Blankfein, Bove said it's likely that high-level executives "are going to have to be removed from their positions both in the management suite and from the board of directors."

He also said Goldman's legal team "will have to be replaced with one having greater skills and Washington know-how."

Bove predicts a fine "of at least $1 billion will be required," and "a new mission statement will be developed and produced."

Bove said Goldman "must start to redefine the financial crisis discussion; it must get proactive in its defense."

"It appears," Bove said, "that President Obama needs a symbol of financial evil that must be expunged from the system. That symbol is Goldman Sachs."

Bove also said senators who assailed Goldman during hearings "had no desire to hear anything Goldman had to say," while Goldman "had no desire to say anything, either."

The government's civil fraud case alleges that Goldman misled investors by failing to tell them that subprime mortgage securities had been chosen with help from a Goldman hedge fund client, Paulson & Co., that was betting the investments would fail. Goldman and one of its traders, Fabrice Tourre, have denied wrongdoing and said they will contest the allegations in court.

Goldman's stock took a hit after the complaint was announced, then took another dive on Friday, after word that the Justice Department had opened a criminal investigation of the Wall Street powerhouse over its role in the mortgage securities deals it arranged.

Comments

[munki]

12:32 AM on 05/06/2010

In Asia they say "too thick skin", my understanding is - no matter what it may not make them feel shamed to take responsibilities. Am I correct?

[tuberider]

08:48 PM on 05/05/2010

Testing: 1 2 3 ...

[getsit]

04:41 PM on 05/05/2010

Interesting, oust these guys as incompetent. I think they were perfectly competent and greedy. Performed as they were expected to. Made themselves and Goldman Sachs sacks of money. Now to be replaced with even shoddier, sociopath personalities who will know how to better handle our government yahoos.

Let's cut even more regulations and make even more money! Scre* the investors. If they're too stupid to realize they're being conned then they deserve what they get.

[ThePeacemakers]

06:08 PM on 05/05/2010

The greedy call the shots.

The greedy hire the inept and some of the smart to work for them...but they keep the total picture of what is going on hidden.

[quindy]

03:25 PM on 05/05/2010

"...that President Obama needs a symbol of financial evil that must be expunged from the system."

I think President Obama would rather have successful, honest bank that didn't ruin the economy. He'd rather have booming economy than this mess he inherited. He doesn't need "symbols of financial evil", but has to clean up the mess and restore trust and order in the banking system.

Crooks can never admit when they do something wrong.

[marijam]

05:47 AM on 05/05/2010

You can't blame it on "the market" when you have previously called yourselves "Market Makers".

[davidwayneosedach]

12:33 PM on 05/04/2010

Not without multi-million dollar payoffs.

[mrspiffy]

11:27 AM on 05/04/2010

Perp walk...
http://yieldpig.blogspot.com/

[Whitley2009]

11:11 AM on 05/04/2010

They will be "ousted" with large severance packages.

[bignugly]

11:06 AM on 05/04/2010

Are the executives being ousted because they did a poor job of covering it up or failure to give info to government?

[hellboundtrain]

10:22 AM on 05/04/2010

They are traitors, bent on the destruction of the financial markets and the U.S. and shorting or naked shorting the systems as they went down.

[Whitley2009]

11:14 AM on 05/04/2010

Traitors is absolutely correct. These reptilian people are all for the Rothschild banks, corporations, and industries, and not for the American people in any way whatsoever.

[RickshawJohnson]

12:18 PM on 05/04/2010

I wasn't aware that a business had to meet the requirement of being "for the American people". When was this new metric put in place?

Is UPS "for the American people"? How about Dell? Google? Are they "for the American people", or are they "for profit"?

These are businesses, not government entities. Their responsibility is to make money, and share the wealth of job opportunities that come along with making that money.

[artist-53]

10:16 AM on 05/04/2010

"INEPTITUDE"??? I see! If a crime occurs on WS that effects the entire globe,, it's referred to as "Ineptitude". While an individual who is unable to afford the unjust and scrupulous mortgage practices is called, a crime.

Somewhere our priorities have been hijacked. The Monopoly Player with the most cash and property wins, and is merely considered to be Inept.....What a shame. What a SHAM!

[Kathy Bishop]

10:13 AM on 05/04/2010

This analyst is insane - unless these guys go to jail, they will not be ousted. You do not get ousted in this greedy country of ours if you make the company billions when others are losing their shirts. Ethics, smethics if there is money to made. Just look at the watered down debate in Congress if you don't believe.

[hollybork]

10:10 AM on 05/04/2010

"Goldman has simply been outclassed at every movement and simply does not know how to respond to this challenge." The underlying sentiment here is that Goldman has failed to manage being caught in the act of fraud, duplicity and client betrayal.

They are onlhy "incompetent" I take it because they are unable to rationalize away fraud and misrepresentation so they "look bad." Is that the important point? I don't think so. Their greedy self interest was over the top, exercised at substantial risk to their clients, their risk insurers, and the American People at large. To say, as the headline asserts, that Goldman execs will be "removed for incompetence" is like comparing these financial tricksters to the Times Square Bomber or the Christmas Bomber, both of whom were inept, ridiculous creeps who were truly laughable in their clumsiness. In fact what Goldman did was wide spread and effectuated with systemic brilliance and perfect timing. What they did was done with criminal and malicious genius bordering on sociopathology. GS became on the whole a corporate culture that was profoundly morally flawed.

Does anyone else agree with me in this analogy? What Goldman did is more akin to what George Bush did in selling a bogus war so his buddies could get oil resourcing contracts and the military armament dealers would get rich. It was built on blind self interest, with no moral compunction for the destruction irt could potentially create for others.

[Whitley2009]

11:16 AM on 05/04/2010

I agree. If any of the top executives are purged, it will be because they allowed Goldman-Sachs' true conduct to be exposed. They let the intentional crash and grab go too far.

[hollybork]

04:05 PM on 05/05/2010

What I fumbled over in three long paragraphs you summarized in two sentences. Very succinct. Fanned!

[Box500]

09:41 AM on 05/04/2010

Oh my....they will be "ousted?" "Ousted" with their millions of dollars and financial security firmly in place for life..just what their goal was. Then GS can proceed with a "clean slate"....to plunder again.

[Whitley2009]

11:18 AM on 05/04/2010

Yep, they crash the market about every 20-25 years so they can crush the little banks that are rising in competition. They do NOT like banking competitors. When this latest crash occurred, the reptiles started gobbling up the smaller financial houses.

It's an old story that we Americans have allowed to be repeated over and over.

[MetalCanuck]

10:41 AM on 05/05/2010

Thats right, your government and others are corrupt and bought by these guys. You will never see a return to prosperity till all these banks are cleaned out and broken up.

[mariusvinchi]

09:27 AM on 05/04/2010

I honesty don't think these Execs care one way or the other at this point. In the last two years they have made more than enough money to live several lifetimes quite luxuriously.
Ousting them should be the beginning. Shareholders have a right to seek damages from these execs for their fiduciary failure, and should do so with the utmost zeal! After they've been bankrupted, the US Attorney should step in with criminal charges. In this instance, I as a taxpayer, would be happy to pay the tab for their Public Defenders!

[Whitley2009]

11:19 AM on 05/04/2010

I would like to see some claw back actions whereby the government started after their personal assets. They owe the American people a lot of money, and they should be forced to give it back.