wakeup call

Obama and the Bankers - An Imagined Conversation

-A year ago the administration calls in the heads of the top 11 banks
-The bankers are told they can't leave the room until they take Fed money
-the administrations limits salaries for top bankers
-the banks pay back the government loans they didn't want in the first place
-The administrations tries to force the banks to take direction from the administrations and threatens more control because they took federal money
-circular logic at its best

Obama and the Bankers - An Imagined Conversation

-A year ago the administration calls in the heads of the top 11 banks
-The bankers are told they can't leave the room until they take Fed money
-the administrations limits salaries for top bankers
-the banks pay back the government loans they didn't want in the first place
-The administrations tries to force the banks to take direction from the administrations and threatens more control because they took federal money
-circular logic at its best

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.

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.

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.

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

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?

Did Geithner Bail Out Goldman Sachs?

Interesting series of comments. Keep in mind that had AIG filed for bankruptcy immediately Goldman would have had to come up with $20 billion immediately. An AIG bailout gave Goldman the opportunity to (1) hedge its AIG exposure after the fact and (2) request to be treated as a commercial bank and have the request approved in a matter of hours. This last point would allow Goldman to dip into any bailout pool for commercial banks. By the nature of the bailout for AIG with respect to the government ownership the government had no concern about shareholder value. Its almost as if once Goldman was taken care of what happend to AIG became immaterial.