ItsJustMe

How Much Are Goldman's Level 3 Assets Worth?

miniMe, if GS goes bankrupt, then you are correct that we the people will end up eating some losses (although if that happens, we had ALL better demand that Congress go after all of the excessive bonuses that were paid out by the executives profiting from these risky loans. If not, a class action lawsuit would do the trick but then the lawyers would profit by hundreds of millions).

However, the Fed IS taking steps to prevent GS and the other banks it's lending to from going under. drmalaka is correct that the Fed is buying time for these banks to write down the loans gradually against future profits and also to raise new capital.

That is why I have long-term puts against them. The Fed will keep them from collapsing which could send the financial markets into a tailspin, but the Fed CANNOT keep their stock from gradually dropping to a price more reflective of their true market value in a changed world...