wakeup call

Questions Remain on Goldman Sachs / AIG Bailout

Might GS be too big to fail or simply too powerful to be fully investigated?

AIG Bailout: A Goldman Rescue in Drag?

To add credence to Pirrong"s position someone should take a look at the actual claims under AIG's CDSs. Virtually zero claims. If one looks at the actual default rate on the CDO obligations versus the market valuation my kids could have found a better fix for AIG's crisis and yet GS was asked to help and their answer was sorry we can't. Possibly too busy protecting their own hide? Fed guarantees would have protected AIG's counterparties with virtually no additional support from the taxpayers and the hit taken by AIG's institutional shareholders would have been much less that disaster that actually occurred. I still maintain that during the first two weeks of the AIG bailout GS was scrambling to protect itself while its government "friend" kept AIG on life support to avoid its filing Chapt 11. Once GS was protected no one cared about AIG.

Bailout Alternatives

Completely agree with Bullgator. 72% of AIG shares were held by institutional investors. They paid a very high price to bail out Goldman. Gaithner is now under a microscope for his role now someones need to start looking at Paulson. The Fed guarantee route would have protected a significant amout of shareholder value which dropped from about $180 billion to about $3 billion all to protect Goldman against a cash call of about $20 billion.

Blankfein Defends Goldman, Is Flippant with Facts

As I have stated a number of times Goldman is too powerful to be prosecuted! The facts have been in the open for almost a year. The links have been constructed for those who don't understand how the markets work. At the end of the day AIG shareholder lost almost $175 billion in market capitalization to save Goldman from having to raise $20 billion. If I were one of the many institutions that had significant holding in AIG's shares I would go after Goldman and the the ex-Goldman employees that run the Federal government. When Goldman was asked if it could assist AIG last September the greatest investmetn bank in the world said "Nope." But they sure helped themselves.

Too Big to Fail - Even Greenspan Is Speaking Out

Has everyone forgotten that Citi was deemed too big to fail in the 90s after it suffered hugh real estate losses and Walid was allows to invest in a significant share to bail it out.

Wasted Lessons from AIG

And Greenberg was misspelled

Time to Read the Riot Act to AIG

There seems to be a deficient IQ at work here. First, Benmoche was asked to take the job. He laid out his conditions including his previously planned vacation, a reasonable compensation package and that if the goveernment was looking for a liquidator it wasn't him.

Under Liddy and Reynolds the forced fire sale liquidation was a disaster and would not lead to a government payback. The most compelling indication was the sale of Hartford Steam Boiler. Here was a very profilable investment that AIG acquired about 8 years ago for $1.2 billion, consistently made money and was fire-sold for $743 million. A similar push was in the works for ILFC.

The $180 billion life line was to bail out GS, not AIG. AIG was simply the conduit.

The Governmetn could have saved a tone of money by simply guaranteeing AIG counterparties as they did with Citi whihc would have minimized the liquidity crisis at AIG.

AIG is also a significant insurance capacity provider in the insurance markets. Losing that capacity would create problems.

Dialoguing with Greenberg may give Benmosche some of the insite that previous CEOs never bothered to get whihc made them ineffective. AIG's massive network has value, including the synergist value of the whole being greater then the some of its parts. It still has some of the best talent in the industry. As a company it also employes over 100,000 people who no one needs added to the ranks of the unemployed.

Will AIG's Liquidation Ever End?

Why rush sales of crown jewels in a down market? When AIG got an extension on its government support facilities all assets sales should have stopped pending a market turnaround. Selling assets in the market on a rush basis will only results in significant profits to purchasers will no collateral benefits to the federal government as lender.

As a US tax payer I would like to see maximum value derived for each asset sold. This should not be a rush to liquidation but a rationalization of one of the worlds top insurers that allowed one area to get out of control.

Lloyd Blankfein and Taxpayers: Sorry Seems to Be the Hardest Word

Blankfein was one of the handful of architects of the AIG bail-out that help a $180 billion market cap company degrade to a $2 billion market cap company. Had they not received 100 cents on the dollar from that bailout GS would have had to raise $20 billion which would have put them out of commission. So to protect itself it essentially killed AIG and damaged all the institutional investors that were heavily invested in AIG. GS was where Paulson and Willumstead went for assistance initially for AIG and the premier investment bank threw up its hands and decided it couldn't craft a solution but at the same time scurried about to protect itself quite well. The obvious solution would have been to use Government guarantees to avoid the collateral calls which would have ultimately preserved a significant portion of AIG market cap, kept the government's cash injections into AIG at a significantly lower level, preserved value to all AIG's institutional investors and even taken the pressure off of GS. However, give how firmly woven GS is into the fabric of the Federal Government they appear to be accountable to no one.

AIG's Collapse: Was It Criminal?

As stated earlier Goldman is too powerful to be prosecuted. There have been numerous articles tying the Goldman pieces together that ultimately led to the AIG collapse but Washington has not taken a single action and shows no inclination to do so. Washington has been rife with tax cheats, amnesia of convenience and "hollier than thou" rhetoric and that's just our elected officials. Chasing Cassano might be worth while but once the AIG board sent an auditor to AIGFP review CDS valuation, Cassano refused to let him see the books and the auditor reported this to the Board, the lack of action by the board became the major problem. Once Sullivan and Bensinger (former CEO and CFO) signed off on the financial statements for AIG they became responsible to the shareholders for any inaccuracies in those financials.

Does anyone really want all the ugly details on what went on at AIG because it might shed too much light on how Goldman was the ultimate beneficiary? Bringing us back to the original comment that Goldman is too big to prosecute.

Anyone want to start a new reality show titled "Where in the World is Henry Paulson"?

Goldman Sachs Backlash Is Picking Up Steam

One week ago the information on the linking of Goldman Sach's to the AIG bailout came to light in detail. Since that time there has been virtually zero follow-up. I guess Goldman is too powerful from both the perspective of being just about the only remaining investment bank(commercial bank when convient) and having its past executives so firmly intrenched in the federal government. AIG might be too big to fail but Goldman is too powerful to be investiated

Are the Banks Telling Us the Truth?

1 week ago the information on the linking of Goldman Sach's to the AIG bailout came to light in detail. Since that time there has been virtually zero follow-up. I guess Goldman is too powerful from both the perspective of being just about the only remaining investment bank(commercial bank when convient) and having its past executives so firmly intrenched in the federal government. AIG might be too big to fail but Goldman is too powerful to be investiated.

Energy Policies May Lead to Carbon Crack-Up by 2012

Why is no one paying attention to the inherent problems with ethanol. Phase separation, affinity for moisture and corrosive nature of ethanol are major problems which have yet to be solved. Car manufactures small motor manufacturers have all panned ethanol to the point of threatening to void warrantees if ethanol blended gasoline exceeds the 10% level. This is another indication that people make decisions and force the facts to support those decision. Lets try something novel - lets review the facts and then draw a conclusion. Washington needs to set policy by understanding the facts in the real world and not making decision because they support a political position.

AIG CDS: The Unwinding Begins

There was a frairly scathing article on CreditWatch yesterday highlighting the many Goldman players, both past and present, that were involved in the AIG issues. If there is no follow-up to that then someone needs to determine just how influential Goldman is in controling government policy. It would be interesting if all the Washington geniuses jump ship and conduct a vary ugly witch hunt to protect their own hides by hanging Goldman out to dry.

FASB Changes Perpetuate Fair Value Lying

Your generalization using the condo example is short sighted. The shifting sand issue should have been uncovered if proper due diligence was undertaken resulting in the deal never being done. This has nothing to do with mtm. Forcing companies with large, longterm hold portfolios to take paper losses due to mark to market accounting is dealing in the make believe. As an example if I make investments with a hold to maturity strategy and are forced to mtm quarterly the volitility reflected in my financial statements would have me go from red ink to black and back depending on general market conditions. Would I have earned or lost cash - absolutely not. Rather when I actually sell or redeem those investments then I would reflect a real gain or loss. Now tell me again why mtm is a good thing?