More Goldman Outrage

David Viniar is CFO of Goldman Sachs (GS). On September 16, 2008, the day after the Lehman collapse, Goldman conducted a conference call. At that time, Viniar said, "I would tell you is, given the outcome at Lehman and whatever the outcome at AIG, I would expect the direct impact of our credit exposure to both of them to be immaterial to our results."

Saturday's New York Post article by Josh Kosman and Mark DeCambre (here) reveals that GS has filed a suit that claims a $2.5 billion contractual obligation to them by Lehman. Of course, they are not likely to have this claim honored. There are about $50 billion in bankruptcy claims against about $5 billion of Lehman assets. If they are apportioned a settlement, it will be about $250 million.

What is Goldman thinking? They are exposing one of two things: (1) duplicity or (2) incompetence. They are doing this for a potential $250 million? Maybe they are so arrogant that they just don't care or maybe they didn't think anybody would notice.

According to Kosman and DeCambre, previously Goldman thought the claim would be larger:

"Goldman, in last month's claim, said it was initially owed $4.2 billion, but reduced that figure to $1.5 billion after it replaced some Lehman positions."

Replaced some Lehman positions? Did they trade off (cross cancel) some CDSs with other counter parties? This needs clarification.

In the new claim, the $1.5 billion was increased because GS "discovered" some new related material. This comes to light more than a year later? Are these guys for real?

Of course, the amounts we are talking about here are almost trivial in relation to the CDS payments made by AIG, using government money, to GS previously. This was $13 billion (see LA Times article here). Immaterial to results (see September 13 statement above)? What a load of male bovine excrement!

Other large banks also have claims pending, totaling more than $10 billion (not including GS). The list is available in the Post article (here) and includes Bank of America (BAC) and Deutsche Bank (DB).

Disclosure: Currently own SKF (Ultrashort Financial ProShares).

Comments

[BobSRQ:]

It is exactly this kind of BS that these idiots think warrant their giant bonuses. All they do is "play the system" for paper profits and then turn in the bonus form. They have no idea whether their actions have generated any actual profits for the owners of the company (read: shareholders), nor do they care. They just want the pay and bonuses they "earned" by their own measure. Kick 'em to the street and let them look for a real job.

Oct 26 06:01 PM

[Albertarocks:]

On Oct 26 06:01 PM BobSRQ wrote:

> It is exactly this kind of BS that these idiots think warrant their
> giant bonuses. All they do is "play the system" for paper profits
> and then turn in the bonus form. They have no idea whether their
> actions have generated any actual profits for the owners of the company
> (read: shareholders), nor do they care. They just want the pay and
> bonuses they "earned" by their own measure. Kick 'em to the street
> and let them look for a real job.<

Kick 'em to the street? Tie them up and leave them lying in the street.

Oct 26 07:52 PM

[imapopulistnow:]

I would like to live in a nation that does not have to worry about the corruption of investment banks. Lets abolish these parasites.

Oct 26 10:17 PM

[Donald Ingram:]

All the palavering about GS and what crooks they are won't accomplish a thing - not one iota, since the crooks also own the Fed and the Treasury, with a $trangle hold on Congress, to say nothing of the White House. The fox has been given free run of the hen hou$e since the Clinton administration. Don't know why everyone is so surprised all of a sudden? Business as usual, thats all!

Oct 26 10:31 PM

[Leftfield:]

Let's hope their greed will be their downfall. The seeds of their destruction. Soon. It will be appreciated if there's something left for the rest of us by then.

Oct 26 10:38 PM

[goldman_sachs:]

How much does Goldman charge the government in derivatives to hold the money they

Oct 26 11:06 PM

[goldman_sachs:]

How much does Goldman charge the US Gov't in derivatives to hold the money they lost in a failing investment?

Oct 26 11:08 PM

[goldman_sachs:]

Of the $2.5B in "contractual arrangements", I wonder how much of that was actual goods sold and moved. I'm guessing the majority of it was paper, hand shakes, 5 Star dinners to talk about the paper, massages, airline tickets to get to the meetings in Paris. I'm sure they're gonna be very pissed off about only getting 10% of that. Life sure sux for the wealthy.

Oct 26 11:12 PM

[SeekingTruth:]

Outrage? Yes, some, but no where near enough and totally ineffective.
This and even worse past behavior is the reason America is facing a margin call that it cannot meet or cover.

Oct 26 11:18 PM

[Angry Banker:]

No one is forcing you to live in America. There's no investment banks in North Korea.


On Oct 26 10:17 PM imapopulistnow wrote:

> I would like to live in a nation that does not have to worry about
> the corruption of investment banks. Lets abolish these parasites.

Oct 27 08:49 AM

[Michael Clark:]

"Love it or leave it!"

I remember the 60's and 70's the pro-Vietnam War 'patriots' were giving the anti-war demonstrators the 'love it or leave it' message, meaning 'get the hell out if you don't want to go along with the program'. Well, criticizing the government when it is wrong is what democracy is all about.

I would also like to live in a country where the banks didn't own the government. But I don't feel like moving. I feel like re-forming the country I love, so it's a real democracy again.


On Oct 27 08:49 AM Angry Banker wrote:

> No one is forcing you to live in America. There's no investment banks
> in North Korea.

Oct 27 12:45 PM

[Michael Clark:]

I agree. But they were given the run of the hen-house since Reagan was elected. Part of Reagan's message was to let business police itself. Clinton went along with the program, so he could get re-elected. But Clinton didn't really start anything, except dirty business with cigars in the White House (picking up what JFK did, I think).


On Oct 26 10:31 PM Donald Ingram wrote:

> All the palavering about GS and what crooks they are won't accomplish
> a thing - not one iota, since the crooks also own the Fed and the
> Treasury, with a $trangle hold on Congress, to say nothing of the
> White House. The fox has been given free run of the hen hou$e since
> the Clinton administration. Don't know why everyone is so surprised
> all of a sudden? Business as usual, thats all!

Oct 27 12:48 PM

[TinyTim:]

John-
Didn't you have a post a while back that stated GS was making a tender offer for the US Treasury?

This is the stuff that Thomas Jefferson and Andrew Jackson were warning about 200 years ago. Now we have it in spades. Regulatory capture. Expect to see David Viniar on the $20 bill any day now.

This is especially upsetting after reading your article on the ING breakup.

Oct 27 03:01 PM

[BRUCE E. W.:]

www.sourcewatch.org/in...

www.banksterusa.org/

www.prwatch.org/node/8628

www.pbs.org/wgbh/pages... (top)

www.pbs.org/wgbh/pages... (below)

One of the reasons these Financial megalomaniacs are too big to exist is that they have distorted both the scope and scale of finacial services. Finance is financing finance; that's it! What is supposed to faciltiate a means to a desireable end has now become the be all and end all onto itself; and to hell with the rest of the economy. In fact, after the lower strata is totally bankrupt, they will be there to buy it out (for pennys on the dollar of course).

The second reason is that we are now (all of us) capable of talking about billions and even trillions without gasping anymore; and they are actually growing depoendent upon such tran$actions to get their next bonus fix. Why are we feeding these puffed up junkies?

Oct 28 01:15 AM

[BRUCE E. W.:]

Apparently, if the big money isn't buying something out...it's selling them out in hot pursuit of total monopolistic dominion. They have essentially captured the market and competition is not optimistic about their opprtunites:
bloomberg.com
bloomberg.com/apps...
by Elizabeth Hester and Zachary R. Mider
Oct. 21 (Bloomberg)

" JPMorgan, which posted net income of $8.45 billion for the nine months, and Goldman Sachs, with $8.44 billion, are the most profitable U.S. banks. "

– JPMorgan Chase & Co., navigated the financial crisis without a quarterly loss and is now making more money advising more corporate clients on mergers and acquisitions than Goldman Sachs Group Inc."
"The New York- based lender took in $1.26 billion in advisory fees in the first nine months of the year..., data compiled by Bloomberg show. The bank also extended its lead in underwriting equity and debt offerings, earning $4 billion in the same period, twice as much as Goldman Sachs."

"...JPMorgan and Goldman Sachs may make it harder for other banks, including boutique advisory firms, to compete, said Matthew McCormick, a banking-industry analyst at Bahl & Gaynor Inc. in Cincinnati, which manages $2.5 billion."

"... JPM has also taken considerable market share in investment banking throughout the crisis"

“They have captured share and will sustain a lead for a considerable period of time,” McCormick said. “It’s going to be very difficult for upstart or broad-based firms to come in and usurp what many believe are the insurmountable leads that Goldman and JPMorgan have over competitors.”

Oct 28 01:26 AM

[Steven Hansen:]

this type of crap continues to bog down our legal system. i have a problem arbitrating between thieves.

Oct 28 03:08 AM

[Wildebeest:]

On Oct 27 12:45 PM Michael Clark wrote:

> "Love it or leave it!"

or change it!

>
> I remember the 60's and 70's the pro-Vietnam War 'patriots' were
> giving the anti-war demonstrators the 'love it or leave it' message,
> meaning 'get the hell out if you don't want to go along with the
> program'. Well, criticizing the government when it is wrong is what
> democracy is all about.

exactly.

>
> I would also like to live in a country where the banks didn't own
> the government. But I don't feel like moving. I feel like re-forming
> the country I love, so it's a real democracy again.

Oct 28 05:35 PM

[Wildebeest:]

If the founding father were alive they'd take up arms.

Congress seems a combination of incompetent and criminally neglectful.


On Oct 27 03:01 PM TinyTim wrote:

> John-
> Didn't you have a post a while back that stated GS was making a
> tender offer for the US Treasury?
>
> This is the stuff that Thomas Jefferson and Andrew Jackson were warning
> about 200 years ago. Now we have it in spades. Regulatory capture.
> Expect to see David Viniar on the $20 bill any day now.
>
> This is especially upsetting after reading your article on the ING
> breakup.

Oct 28 05:36 PM

[John Lounsbury:]

Janet Takavoli has a clear opinion that Viniar was lying pragcap.com/goldmans-l...

Oct 28 09:50 PM

[madashell n...:]

They are thieves and deserve nothing more than to be taken out back and shot in the head! As Thomas Jefferson once said a revolution is good for the government , And I think these actions are overdue!

Oct 30 08:05 PM