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Goldman Sachs Had "HUGE LIQUIDITY!"


From Wall Street Journal:
 
“Goldman Sachs's CEO says the firm got no special treatment during the bailout—and he intends to pay bonuses this yearOur liquidity was huge. I knew what our liquidity and cash was… Being Goldman Sachs and overachievers that we were, we were the first ones to do it. I didn't know it would be a pejorative. At the time I thought it was a good thing. In retrospect, I'm glad we stopped at 22 [billion]. I wish we'd stopped at zero."
 
Great! 
 
Here is a wild idea.
 
Now that GS is more than safe and sound, why not sell $10 billion worth of non-FDIC guaranteed bond and use the newly raised capital for its bonus?
 
Sheila Bair can then raise that same amount, via TLGP, to boost her insurance fund.
 
I am sure there are a lot of technical issues involved with this "swap" and may not even be legal.  Nevertheless, as shown sporadically throughout this financial crisis, exceptions could always be made when it came to solving "systemic risk."

To be sure, FDIC is definitely too big to fail.
 
The same can be done with all institutions participating in TLGP and are giving out bonuses.
 
 
 
First-Half Revenue, Compensation and Head Count:
 
                                     Revenue       Comp       Employees Comp/Employee
 
Morgan Stanley            $8.36 bln     $5.91 bln            62,215*   $95,009
 
Goldman Sachs           $23.2 bln      $11.4 bln            29,400    $386,429
 
JPMorgan
Investment
Bank                            $15,672 bln   $6.01 bln            25,783    $232,983
 
*Includes 20,004 employees related to the Morgan Stanley Smith
Barney joint venture with Citigroup Inc.
I am not even asking for the entire FDIC backed amount, just the amount in bonus.

That is already $23 billion from 3 banks, for just the first half of the year!
 
This way, the insurance agency, without altering its total liability, will essentially be getting cash from the big, corrupt banks that started this mess.
 
Better yet, Sheila Bair won’t need to beg Tim Geithner ( our tax dollars) for help.
 
Best of all, healthy and responsible banks that did not cause this financial crisis, and are currently extending loans to average consumers and small businesses, won’t end up failing as a consequence of this 3-year FDIC prepayment.

By the way, TLGP stands for Temporary Liquidity Guarantee Program.
 
But Goldman's “liquidity was huge!”
 
JP Morgan also emphasized it didn’t need help. 
 
So why did our regulators force liquidity assistance on banks with no liquidity problem
 
Wamu and Wachovia would have loved to own that privilege.

So would these little banks important to their local economy:

"Small Banks Failing at an Increasing Rate"


*imho*