Part of being a good leader is accepting that ultimate responsibility for the organization rests on your shoulders. John Thain dropped that ball yesterday when he distanced himself from his own firm in the midst of the Merrill Lynch conference call.
Goldman Sachs analyst William Tanona posed the following question:
“I guess in terms of you guys were obviously a big underwriter in both cash and synthetic CDOs, what did you invest the underlying cash collateral in the synthetic CDOs and what type of instruments and how are those reported on the financial statements?”
“First of all I take exception to the you guys comment. I did not create any of these CDOs...”
Here is the rest of the quote for context
“……..I think we -it’s probably specific on the deals because whenever there’s one of the synthetics there will be a whole series of requirements as to what the collateral has to look like--in general, when you create a synthetic it will have a whole bunch of criteria about what the collateral has to look like, it had to satisfy a whole series of rating agency test, it had all kinds of diversification requirements in it and I think it’s probably not going to be easy or probably not very useful to answer your question kind of generically because my guess is that it’ll be totally dependent on each individual security. So I think that each one would be different.”
Thain is a rich man. He is also another one of these vaunted Goldman Sachs men who have been given the benefit of the doubt in managing one of America’s most important financial institutions.
Thain has an opportunity to do things differently. I sincerely hope that yesterday’s conference call is does not manifest into a “Trend” and that accountability is part of his new leadership plan.
- Andrew Barber