Goldman Sachs Links and News - November 2, 2009

Guest Post: Goldman Sachs - Reasonable Doubt | zero hedge
By Tyler Durden
Other than: Get one! Goldman Sachs exotic housing bet; was it illegal ? Posted by: Cheeky Bastard. Post date: 11/01/2009 - 11:43. An interesting report coming from McClatchy, concerning Goldman Sachs bets on the housing crash. ...

Fraud at Goldman Sachs?
Huffington Post (blog)
McClatchy is out with an incredibly important series on Goldman Sachs, the first two parts of which have gone up already, that raises questions about ...

Citigroup Was a Winner of Paulson Aid to Banks, Researchers Say
Bloomberg
Citigroup and the three other firms that either merged into or became commercial banks -- Goldman Sachs, Morgan Stanley, and Merrill Lynch -- showed signs ...

A Pillar of Jello: Geithner Handed Billions to Goldman Sachs
Chicago Daily Observer
This morning on the Market Ticker, Janet Tavakoli, Chicago-based popular biographer of Warren Buffet, posts some harsh observations concerning Goldman Sachs ...

This Is A Scam From Goldman Sachs(GS) You Would Really Hate
Benzinga
In 2006 and 2007, the upper echelons at Goldman Sachs (NYSE: GS) realized that a fall in housing prices is imminent. Did they tell their investors not to ...

Deal Could Help Fannie Mae's Finances but Is Goldman Sachs Becoming Too Powerful?
ABC News
By MATTHEW JAFFE The Treasury Department could block a possible deal between Goldman Sachs and struggling government-backed mortgage giant Fannie Mae, ...

Treasury Mulls Goldman Sachs Offer for Fannie Mae Tax Credits
Bloomberg
2 (Bloomberg) -- The US Treasury is considering whether to allow Goldman Sachs Group Inc., the most profitable securities firm in Wall Street history, ...

McClatchy Digs Into Goldman Sachs' Dealings In Subprime Mortgages
NPR
By Mark Memmott "Goldman Sachs: Low Road To High Finance." That's the name McClatchy Newspapers has given to a multi-media report, based on five months of ...

For Wall Street and Goldman Sachs the Party Continues
Huffington Post (blog)
The recent revelations about the criminal "pump and dump" speculative behavior of the Goldman Sachs Syndicate, along with its heartless new role as Repo-Man ...

Goldman Sachs: Reasonable Doubt - The Market Ticker
By Karl Denninger
Was the risk that Goldman hedged with AIG as bad as Goldman Sachs Alternative Mortgage Products' GSAMP Trust 2006-S3? Any risk manager worth their salt would have reasonable doubt about this deal and conduct a fraud audit. ...

Goldman Sachs Seizing Homes Subprime Mortgages Bought
By The Huffington Post News Editors
Goldman spent years buying hundreds of thousands of subprime mortgages, many of them from some of the more unsavory lenders in the business, and packaging them into high-yield bonds. Now that the bottom has fallen out of that market, ...

Amid the housing crisis, Goldman Sachs gives, takes away
MiamiHerald.com
A California couple close to losing their home found that Wall Street giant Goldman Sachs was the company behind their subprime mortgage and was trying to ...

Connecting.the.Dots: Goldman Sachs' Stolen Umbrellas
By ROBERT STEIN
According to the McClatchy Newspapers, Goldman Sachs spent years cornering the umbrella market: In 2006 and 2007, they "peddled more than $40 billion in securities backed by at least 200000 risky home mortgages, but never told the ...

Sorry, Folks: Goldman Sachs Was Not "Secretly" Short Housing During The Bubble ...
The Business Insider
It's time to finally lay to rest claims stretching back as far as 2007 that Goldman Sachs was peddling securities backed by at least risky home mortgages ...

McClatchy's Goldman Sachs expose- Part 2

Goldman. Using taxpayer money to screw the middle class. You know, I always thought that if a group of people were to damage the economy, ruin millions of lives and abscond with billions of taxpayer money, that group would be thought of as traitors instead of financial 'wizzards'.

Goldman takes on new role: taking away people's homes

SAN JOSE, Calif. — When California wildfires ruined their jewelry business, Tony Becker and his wife fell months behind on their mortgage payments and experienced firsthand the perils of subprime mortgages.

The couple wound up in a desperate, six-year fight to keep their modest, 1,500-square-foot San Jose home, a struggle that pushed them into bankruptcy.

The lender with whom they sparred, however, wasn't the one that had written their loans. It was an obscure subsidiary of Wall Street colossus Goldman Sachs Group.

Goldman spent years buying hundreds of thousands of subprime mortgages, many of them from some of the more unsavory lenders in the business, and packaging them into high-yield bonds. Now that the bottom has fallen out of that market, Goldman finds itself in a different role: as the big banker that takes homes away from folks such as the Beckers.

The couple alleges that Goldman declined for three years to confirm their suspicions that it had bought their mortgages from a subprime lender, even after they wrote to Goldman's then-Chief Executive Henry Paulson — later U.S. Treasury secretary — in 2003.

Unable to identify a lender, the couple could neither capitalize on a mortgage hardship provision that would allow them to defer some payments, nor on a state law enabling them to offset their debt against separate, investment-related claims against Goldman.

In July, the Beckers won a David-and-Goliath struggle when Goldman subsidiary MTGLQ Investors dropped its bid to seize their house. By then, the college-educated couple had been reduced to shopping for canned goods at flea markets and selling used ceramic glass.

Theirs is an infrequent happy ending among the hundreds of cases in which subsidiaries of Goldman, better known for sending top officers such as Paulson to serve in top Washington posts, have sought to contain bondholder losses by foreclosing on properties and evicting delinquent borrowers.

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Videos and the rest of the story here.

Timothy Geithner: Goldman Sachs fink in the White House

There are many in America who do see the reality.  Many offer their comments and thoughts in their own blogs.  Some are more credible then others and some are just the voices of ordinary people.  All should be heard. 

We at GoldmanSachs666.com do not endorse or promote the works of others but do make them available to you.  I ran across this site and found this post to be interesting enough to post here.

The title of this post is the actual title of the post in a blog called Future News Today.
I must say that there are certain points made that I do agree with and do believe.  But you be the judge.  Reprinted below is a graphic that Future News Today used and I find very interesting.  As I said in my previous post, "a picture is worth a thousand words". Could this be a picture of "The Knights Of The Round Table"?

Graphic from Future News Today

click to enlarge...then hit back to return to this post

From Future News Today

Today he showed his true stripes again. In what was apparently a private meeting with the Chicago Tribune's editorial board he let his guard down.

Geithner says bailout money well spent by Gail MarksJarvis

As U.S. Treasury Secretary Timothy Geithner looks back at the efforts made by government to treat the financial crisis, he says "the money spent was very limited."

The comment might seem startling given his emphasis repeatedly on the need to pull back the nation's deficit once the economy is less "fragile" than it now is.  But as Geithner spoke with the Chicago Tribune's editorial board today, he said "I am deeply at peace with the necessity of what has been done" -- including the government's intervention in GM, investment banks, AIG and Fannie Mae and Freddie Mac.  He emphasized that the money is getting repaid.
[...]
Still, Geithner notes that while there are "encouraging" signs in recent economic statistics, "unemployment probably will rise further." Although some analysts worry that the nation could be going through a "jobless recovery," Geithner says the recovery so far seems to be following a typical path.

Read the full article...click here

There is definitely something amiss here in our country.  Wall Street is flourishing more then ever while the people on Main Street are struggling more then ever.

I ask, who is truly in charge here?

If, as Geithner says - and I do agree with him on this point -  "unemployment probably will rise further" then where is the recovery and who is recovering?

It seems like decisions are being made that only enhance Wall Street by people who are Wall Street.

We the people have many questions and it is our right to get answers.  Join us in our fight to sort out the truth and reclaim what is rightfully ours - our country, our economy and our freedom.

Former Goldman Sachs chief Stephen Friedman

Forget Galleon: What about Goldman’s ex-boss?
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It’s kind of amazing that with all the uproar over the Galleon business, nobody is making much hay over the recent revelations about the AIG bailouts, which make former Goldman chief and former New York Fed chairman Stephen Friedman look every bit as guilty of insider machinations as Raj Rajaratnam of the Galleon fund.

It’s impossible to grasp the totality of Friedman/Goldman’s grossness with regard to the AIG story without a little context. Remember the basic timeline. In the middle of the mortgage bubble, Goldman Sachs found a patsy-buffoon named Joe Cassano at a little corner of AIG called AIG Financial Products, or AIGFP. Cassano was recklessly writing hundreds of billions of dollars worth of credit default swaps for banks like Goldman and Deutsche, essentially insuring certain investments for these banks, including extremely risky mortgage-backed deals.

Goldman took out billions of these CDS positions with Cassano, who had written upwards of $440 billion of these CDS without having even a fraction of the money he would have needed to cover that bet in the event of a disaster of the type that actually ended up taking place, specifically a downgrade of AIG’s credit rating that forced Cassano to pony up wads of cash to cover those positions.

The important thing to remember about all of this is that just because Goldman was buying “insurance” from Cassano, that doesn’t mean they were being responsible. On the contrary: Goldman was creating well over ten billion dollars worth of exposure to a guy that they must have known was an absolute idiot. Now, in a world where actual capitalism existed, Goldman should then have been highly invested in making sure that AIG did not go under. A dead and bankrupt AIG should not have been good news to a company like Goldman Sachs, which had billions of dollars riding on AIG’s financial health.

But if anything Goldman behaved throughout the runup to AIG’s collapse like it couldn’t care less if the company died. In fact Goldman accelerated AIG’s demise by making margin calls against AIG, for both the CDS deals and for deals it had done with Win Neuger, who was running AIG’s securities lending business. What really sank AIG was the fact that the downgrade of its credit rating permitted companies like Goldman to demand large sums of money from AIG in the form of these margin calls, and AIG could not get its hands on enough cash to meet its demands, resulting in the death spiral situation we all witnessed last September. Of all the firms making such demands against AIG, Goldman was the most aggressive (I have more on this coming out in a forthcoming book) and my sources who were involved in the AIG bailout bunker scene of a year ago almost to a man report that Goldman and its chief Lloyd Blankfein took an extremely hard line with AIG.

Why would it act like that? Well, in a normal capitalistic situation, it wouldn’t. But Goldman, it turned out, had an ace in the hole. It seems that when the state stepped in and decided to bail AIG out, its former director, Stephen Friedman, was among those making the decision that AIG’s counterparties should be paid 100 cents on the dollar for its CDS debts. It never made sense that AIG/AIGFP would decide on its own to pay its creditors 100 cents on the dollar for its debts, but now we know, thanks to reporting from Bloomberg, that it wasn’t AIGFP and its CFO Elias Habayeb who was making that decision.

It was, instead, a group of people from the New York Fed who gave that order a group that included Tim Geithner and Friedman. Goldman ended up getting almost $14 billion from AIG after the bailout. And Friedman, we later found out, bought 50,000 shares of Goldman stock after this deal was struck. He resigned in May from the Fed, a few days after the Wall Street Journal broke the story about Friedman’s stock purchases.

Friedman surely had information about key moves involving the bank — like Goldman getting paid off at par in the AIG bailout, or Goldman getting a federal bank charter overnight so that a mountain of cheap Fed money could save it from bankruptcy — before the market got it. That he bought 50,000 shares in Goldman after the AIG bailout and is not in jail right now is sort of amazing, until you consider that it will be a cold day in hell before a former head of Goldman Sachs is arrested for insider trading, even when he gets caught doing it red-handed.

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Read the full story. Click here.

More on McClatchy's Goldman Sachs Expose

Naked Capitalism picks up the story and expounds on it:

"McClatchy, the only major US news organization to question the Iraq war until is was obvious to all that it was a misguided exercise in neocon hubris, has started a series on Goldman’s famed “short subprime” exercise. While the timing and overall outline are not new (as to when and allegedly why the investment bank went short), it delves into some details that have heretofore not been examined, as to how much subprime paper it dumped onto investors during this period, whether this duplicity was permissible, and what sort of damage was visited on foolhardy borrowers.

Unfortunately, for my taste, the series does not appear to be getting enough into the nitty gritty (and it indicates clearly that Goldman has successfully kept mum about the details of how it executed its short). I am keenly interested, because my understanding is that any simple subprime index short would have blown out spreads and thus been very costly to execute.

Goldman used another route….and the road, not surprisingly, was through AIG. From an e-mail over the summer:

This also points out a *VERY* good nugget re: banks who used CDOs/AIG offensively as opposed to as a hedge. This is likely what bothered me most about the AIG debacle. The trades GS had on with AIG were generally *not* super senior CDOs GS was long simply because they had
underwritten CDOs and were “stuck” with the AAA risk as a result. Rather, GS had a whole program of issuance — something they called “Abacus” — which were deals they put together with the sole purpose
of getting short subprime/CDO risk. Their sole purpose in doing the deals was to get long protection/short risk on the underlying collateral. AIG was simply the vehicle they chose to moneitze that PnL. Call me crazy, but I put the AIG counterparties in two different camps: guys like SocGen, who bought bonds in good faith and then hedged the credit risk by buying CDS from AIG, and guys like GS, who used AIG as their lottery ticket for offensively constructed trades to capitalize on mispriced subprime risk. The former, to me, seem much more deserving of a bailout than the latter…"

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Read the rest. Click here

CIT: A Different Kind of Bankruptcy - Courtesy of Goldman Sachs?

Editor's note: It really is like it writes itself. The US government takes a huge hit but Goldman Sachs makes off with a profit? That makes sense. - JDA

CIT: A Different Kind of Bankruptcy?

I can't say I understand bankruptcy in the first place. Not my favorite part of CPA Review but this seems fairly clear.

NYT:

As the CIT Group sought desperately to avoid bankruptcy this summer, it argued that being forced into Chapter 11 protection would spell disaster for its customers: a wide swath of the nation’s small and midsize businesses who rely on the 101-year-old company for financing.

HuffPo:

CIT's move will wipe out current holders of its common and preferred stock, likely meaning the U.S. government and taxpayers will lose the $2.3 billion sunk into CIT last year to prop up the ailing company. Goldman Sachs however, will gain $1 billion because of CIT's bankruptcy, according to a report published Oct. 4 by the Financial Times:

The payment stems from the structure of a $3bn rescue finance package that Goldman extended to CIT on June 6 2008, about five months before the Treasury bought $2.3bn in CIT preferred shares to prop it up at the height of the crisis...

While Goldman is entitled to demand the full amount, it is likely to agree to postpone payment on a part of that sum, these people added. A CIT filing last week said that it was in negotiations with Goldman "concerning an amendment to this facility".

The $2.3 billion lost in taxpayer funds is the largest amount lost since the government began infusing banks with capital, according to the Financial Times.

Even better, WaPo informs us that this is exactly what the retail sector does not need just before what already promised to be a bitter holiday season.

Read the rest from Jr Deputy Accountant here.