One of the largest hedge-fund firms is slashing 150 jobs after losing more than half of its hedge-fund assets since the financial crisis. D.E. Shaw & Co. is cutting about 10% of its work force, among the largest cutbacks in recent memory among major hedge-fund firms. A pioneer in computer-driven investing, the firm in recent years expanded into other areas, such as real estate and private equity. Firm-wide assets have fallen to about $21 billion from nearly $40 billion in 2008, according to a person familiar with the matter. Hedge-fund assets are down to $17 billion from about $35 billion. “The D.E. Shaw group has taken steps to strengthen our business and maximize value for our investors over the long term,” a spokesman said.
It looks like they are cleaning house to make room for Larry Summers. As you may recall, they paid Summers $5 million a year in 2006 and 2007 to do nothing except look pretty in front of clients. I reported this last year in my article, The Wall Street-Washington Financial Complex:
Mr. Summers and Shaw executives say his role there was to be a sounding board for Shaw’s traders. But interviews with friends and former colleagues suggest that Mr. Summers’s role at D. E. Shaw was wider and more complex.
Mr. Summers, these people say, was a marquee hire, a prized spokesman for Shaw. He routinely made himself available for private consultations with Shaw’s clients, an attractive perk for investing with the firm, as one client put it.
Mr. Summers, who taught economics and public policy at Harvard while advising Shaw, also met with investors in the United States, as well as in the cash-rich Middle East and Asia. He spoke at industry conferences, mixing with officials from public pension funds, endowments and other large institutions with many billions of dollars to invest. …
I wonder what his advice to Shaw’s clients was? Did he warn them of the impending bust? I doubt it. I am sure they weren’t paying him to spread bad news.
But here is Summers again, tired out from his stint in the Obama Administration, ready to go back to Harvard and lead the life of the intellectual academic, enlightening young minds. Don’t bet on it. I’ll wager that he’s ready to cash in and make some serious money on Wall Street.
This is the revolving door between Wall Street and Washington in action.
A point I keep trying to make on ZeroHedge. Corruption is the nature of a regulatory/fascist/corporatist state. If you don’t like to see Wall Street and K Street constantly exchanging people, if you don’t like to see Goldman Sachs writing financial regulation, then the only solution is to take from government the power to regulate.
But ZH keeps flogging their story that what we need to correct market flaws is more regulation from the likes of the SEC and CFTC. Perhaps Summers can get a lucrative job working for a High Frequency Trading firm lobbying the regulators and ultimately working with the regulators (against the citizenry) to write regulation??
Of course, he’s going to continue to make big bucks from his Wash. exposure! Just like retired generals, congressmen, bureaucrats, etc. do. That’s why car dealers use pretty woman to show off new car models. He’s just a show piece investors seem to want to rub up against. Is this because of the mystery and poor record of economists and other finance predictors that make these firms buy into this sham? I think so. I don’t think, as Bearster says, that it’s the regulatory schemes that drives this sort of useless marketing ploy that Larry is part of. I think it has more to do with the lack of confidence investors have in listening to Wall Street soothsayers. So, if Shaw want to sell; bring on Larry and his pretty dancing girls! It’s just more show biz.
Ted,
Car dealerships don’t make those pretty girls rich.
You seem pretty confident that he is going to be paid big bucks in a useless and pointless show. At the same time you say that investors are losing confidence in Wall St. soothsayers. So which is it? Will investors fork over their money because they hire a new soothsayer? Or they are losing confidence in soothsayers?
In dismissing my contention, you must also necessarily dismiss that investors (DE Shaw) are buying, or think they are buying, insider knowledge of what Washington will do to the markets next. The key being insider knowledge, vs. an outsider who is guessing.
You are also dismissing that those investors (and DE Shaw) are buying, or think they are buying, access to said Washington machine in an attempt to influence it in their favor. Who better to lobby the gov’t than an ex-government guy?
Your confidence is misplaced.
Jeff, don’t be too concerned about Mr. Summers future. Isn’t he eligible for 99 weeks of unemployment benefits?
Now there’s a story I’d love to run.
Speaking of people who depart government and cash in by selling influence or insider knowledge of future policy decisions:
http://www.zerohedge.com/article/here-how-worlds-biggest-bond-funds-and-others-just-not-you-get-advance-notice-what-fed-about