Editor's Note: There are dozens of posts and articles about what happened between AIG, Goldman Sachs, King Henry and Lord Blankfein. Oh . . . let's not forget Tim the Tax Cheat, because he was the head of the NY Fed when this all went down. Anyway, there are enough serious calls for Goldman Sachs to give back the AIG double-dip, that Washington needs to open an investigations. Below is the title and an excerpt from Business Week . . . main stream media.
Goldman, Give It All Back
by Matthew Goldstein
While the bank is returning the government's $10 billion, why not also return the $13 billion it got from the U.S. through AIG's bailout?
If Goldman Sachs CEO Lloyd Blankfein wants to put his money where his mouth is, he won't stop with just giving back the $10 billion in federal bailout money the investment firm got last autumn. He'll also offer to return some of the $13 billion Goldman (GS) got from the U.S. government by way of the bailout of American International Group (AIG).
. . .
If the government had allowed AIG to file for bankruptcy, Goldman likely would have incurred an even bigger fourth-quarter loss than it reported. So Blankfein owes a bit of gratitude to Uncle Sam. And as my BusinessWeek colleague Roben Farzad pointed out on CNBC on Mar. 27, Blankfein can thank taxpayers by forking over its AIG largesse.
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3 COMMENTS:
GS might be tripple dipping....
http://www.huffingtonpost.com/eben-esterhuizen/conspiracy-is-goldman-sac_b_186629.html
Conspiracy? Is Goldman Sachs Running the Plunge Protection Team?
I'm not against double or even triple rewards if they are legal.
I'm not against selling naked put options if there is enough margin on your account to support this selling.
I'm not against shorting a stock or buying put options if you understand that the stock is doomed.
What I'm against is selling huge number of naked puts on mortgage-backed securities without any margin requirement (AIG). This is not allowed in regulated markets, but apparently is a norm in OTC markets. AIG people new what they were doing, but they kept doing it because selling naked puts brings near-term profits and results in huge bonuses. They didn't care that if the value of the securities dropped, the company would go bankrupt. Oh, wait, would it? Apparently it didn't
Goldman and other banks bought AIG's put options. If AIG went bankrupt, they would not get any compensation. So the banks found a way (King Henry) to use public money to compensate themselves. This is what is really outrages. We all worked and payed taxes, but our tax money was used to compensate Goldman and others who bought the puts in OTC markets.
What should have happened is AIG should go bankrupt as any other reckless and irresponsible company. It is fine that their employees got bonuses for selling puts, but it should have stopped right there: when the sold puts went in the money the company should have gone bankrupt.
The only compensation that Goldman and other banks should have gotten would be the one determined by the bankruptcy court. If you trade OTC markets, you know the consequences. There are no exchanges that enforce margin requirements, all transactions are relying on mutual trust between the involved parties. Apparently, Goldman and other banks have enough political power to ignore these rules and ensure their OTC dealings using public money.
BTW, there was great Daily Show yesterday on this subject with Elizabeth Warren.
Keep up the excellent work..Mike...the slime is beyond the bottom of a cesspool with these guys.
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