Randy Miller

Bank of America's Gain Is Taxpayers' Loss

Read Niall Ferguson in this week's Newsweek. He makes a lot of sense about Congress and the WH not having the political will to break up the Big Financials. To allow the BF's to go forward with an implicit government guarantee is what I find infuriating.

Create true resolution authority for the BF's. If one of them is failing, FDIC or something similar takes them over and liquidates them, making sure the innocent get their deposits back.

But we should all be just as furious about AIG, and I see very little coverage on that. Goldman Sachs gets paid 100 cents on the dollar from AIG, then turns around a has huge profits and the bonuses that go with it. What if GS had gotten 10 cents on the dollar? What would their profit be? Yes, they had an AIG failure hedged, but, (and here is the 185 billion dollar question) if AIG had failed, would those counterparties have been able to pay GS 100 cents on the dollar. I very strongly suspect that GS would have gotten a much smaller payoff. The writer who can prove that gets a Pullitzer, because it looks to me like Goldmans profits, and most of the profits of the big Financials this year, came from the US Treasury.