Goldman Sachs's Steven Mnuchin

Are there other ways that Goldman Sachs alumni can profit from the financial meltdown that GS helped produce by creating and selling junk derivatives? Well, there are suggestions already about speculation in the commodities market now that food prices are going up.

We learn from Bloomberg BusinessWeek about Steven Mnuchin:

"Prior to SFM, he spent 17 years at The Goldman Sachs Group, Inc. as the Chief Information Officer. Mr. Mnuchin ... was in this position since December 2001. While at the firm, he served as the Executive Vice President since February 2001 and was the Co-Chief Information Officer from February 2001 to December 2001. Mr. Mnuchin was a Member of the Executive Office and Co-Head of the firm's Technology Operating Committee from December 1999 to February 2001. He was responsible for overseeing mortgages, U.S. governments, money markets, and municipals in the fixed income, currency, and commodities division from December 1998 to November 1999."

Read the rest of the information here

Then there is this little tidbit below from the video:



View the video here

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and from the blog isthatwacked.com (with some misspellings of the name):

How Goldman is Still Robbing the Public - isthatwacked

Here is another example of how Goldman is robbing the public.

1. IndymacBank was seized by the FDIC (Federal Deposit Insurance Corporation) in July of 2008.

2. The assets of IndymacBank was sold to a company called OneWest Bank by the FDIC.

3. Who owns OneWest Bank you ask? That is Stephen Munchin. Yes the VP of Goldman Sachs – Stephen Munchin. Also, Goldman clients George Sores and John Paulson (these two guys speak for themselves).

4. All mortgages were sold to OneWest Bank by the FDIC for $0.70 on the dollar.

5. In addition, the FDIC guaranteed to cover between 80% and 95% of the losses that OneWest Bank may experience as the result of purchasing the mortgages.

Why is this so bad for you and me? Here is where it gets scary.

6. In case of any losses by OneWest Bank, the calculations are done on the ORIGINAL MORTGAGE VALUE and not what OneWest Bank paid for the mortgage.

Image by Ingram Pinn

Here is an example:

If the original mortgage was for $300,000. OneWest Bank paid $210,000 for it ($300,000x 0.7 – $0.70 on the dollar).

If the house goes into foreclosure or a short sale situation, then the property is put on sale. Let’s say the highest bid for the house in foreclosure is $200,000.

Technically, OneWest Bank lost $10,000 ($210,000 what they actually paid for the house to the FDIC minus what the house sold for $200,000).

Does the FDIC cover between 80% – 95% of the $10,000 that OneWest Bank actually lost? NOOOOOOOO! They guaranteed to cover 80% – 95% of the losses using the ORIGINAL MORTGAGE VALUE.

In this instance, let’s say the FDIC guaranteed 90% of the losses. So using those numbers, the actual amount that the FDIC pays OneWest Bank is $90,000. That is 90% of the difference between $300,000 (the original value of the mortgage) and $200,000 (what the house sold for).

What does OneWest net out from this deal?

So OneWest Bank gets:

$200,000 from the new buyer of the house.

+ $90,000 from the FDIC.

- $210,000 (what they paid to the FDIC).

=$80,000 on a $210,000 investment. A tidy 39% return on their money.

WOW, IT IS GOOD TO HAVE FRIENDS IN HIGH PLACES.

Oh by the way, OneWest Bank may collect more as it is asking the person walking away from the house to sign promissory notes for about $50,000. They are trying to collect more money from the original home owner.

IF THIS KIND OF MONEY CAN BE MADE FROM SHORT SALES AND FORCLOSURES, WHY WOULD OneWest Bank want to modify any mortgages for the current home owners?

Read the full article here