their trading activities. The name of the most controversial part is the Volcker Rule. The trading divisions had historically been the most profitable parts of the bank and so with new trading regulations, we see a massive drop in profits for investment banks. 37. In the P&G acquisition of Gillette, Goldman Sachs had been an advisor on the deal but was also asked to provide a fairness opinion. There is an obvious conflict of interest since GS would only be paid if the transaction went through, so there is an incentive to say that the deal is fair, even if it wasn’t, just so that the likelihood of closing the deal is higher and so they would be paid their M&A advisory fee. Indeed, you will never see an investment bank that is chosen to advise a deal to write a fairness opinion that will say that the deal is not fair. 38. The TARP program basically allowed banks to sell off their toxic assets to the government and increase their liquidity so that they could continue to lend to each other. This also raised investor confidence and so they were willing to once more lend to the banks too. If this had not been done, we would see the fall of numerous banks much in the same manner as how Bear Stearns had fell. The US government eventually owned 36% of Citigroup after the TARP program. 39. You should NOT use his credit card to order pizza, because your credit can be tracked once its swiped and you would be eventually found out and captured by the authorities, which was exactly what happened during the kidnapping of Lampert.
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- U.S. Securities and Exchange Commission, investment banks, investment bank, Investment Banking Final