GOLDMAN BIG DEFENDS $12.9B PAID BY AIG
By KAJA WHITEHOUSE, NY POST, March 21, 2009
Despite catching flack for having accepted $12.9 billion in taxpayer funds as payment for bets it made with beleaguered insurance giant American International Group, officials at Goldman Sachs were unapologetic, saying the payday was strictly business and aboveboard.
"We don't think we did anything wrong," Goldman's Chief Financial Officer David Viniar said in a conference call with reporters. "We had commercial terms. It is our responsibility to our shareholders to make sure that we are protecting ourselves. That's why we enter into these contracts."
Goldman set up the call to "clarify certain misperceptions in the press" around the bank's vulnerability to an AIG collapse. The Wall Street bank was largely successful in soothing those concerns, as Viniar explained how, despite a $20 billion derivative exposure to AIG as early as September, Goldman had set things up so that it could walk away largely unscathed had AIG gone bust.
Since July 2007, Goldman Sachs has spent around $100 million hedging against the risk of default in its AIG derivatives, said Goldman spokesman Lucas van Praag. But in soothing concerns over its exposure to AIG, Goldman officials opened another can of worms namely, why the firm was made whole on its bets, given AIG's troubled financial health and given that Goldman was so well-protected against default.
AIG has come under fire amid revelations that $90 billion of the government funds it received were funneled to its trading counterparties, whose contracts were largely bought out at face value. Goldman was the largest single beneficiary of the funds.
"I think the question is why did the Treasury not demand that Goldman Sachs and AIG negotiate down the collateral agreements on CDS?" said James Kaufman, a former Wall Street banker with Lazard Freres, referring to derivatives known as credit-default swaps. "If we had taken a discount, then we would have taken a loss to Goldman Sachs, and, frankly, as I'm sure you know, we also have taxpayer money at Goldman Sachs," Viniar said. Goldman got $10 billion as part of the Troubled Asset Relief Program.
Viniar also downplayed the notion that Goldman Sachs CEO Lloyd Blankfein had the ear of then-Treasury Secretary Hank Paulson, who was Blankfein's predecessor at Goldman.
Even before AIG became a government-owned enterprise, Goldman had already persuaded the company to pay it $7.5 billion in cash collateral as a result of the waning value of the assets tied to its derivative contracts.
After AIG was bailed out, Goldman received another $2.5 billion in cash collateral, plus $5.6 billion in payments made to unwind its contracts with AIG. Goldman said its remaining derivative exposure to AIG sits at around $7 billion, to which it's received $4.4 billion in collateral.
SOURCE http://www.nypost.com/seven/03212009/business/goldman_big_defends_12_9b_paid_by_aig_160547.htm
Goldman Sachs always has clout in Washington, as evidenced by the firm’s alumni serving as Treasury secretaries under both Presidents Bush and Clinton. Today, in these tumultuous times of bailouts and meltdowns when the investment banking leviathan needs Washington more than ever before, Goldman can leverage its most valuable asset w/ White House chief of staff Rahm Emanuel.
Goldman Sachs is the giant of Wall Street, and more than any other investment bank, Goldman is surviving the current financial storm. Traditionally a Democratic booster, and one of Barack Obama’s top sources of funds in this past election, Goldman has always had some particularly strong allies within government.
Emanuel is one such ally.
An interesting early chapter in the Goldman-Emanuel relationship took place in the setting of Bill Clinton’s campaign for the White House in 1992. Clinton hired Emanuel as his chief fundraiser. At the same time, however, Emanuel was on the payroll of Goldman Sachs, receiving $3,000 per month from the firm to “introduce us to people,” in the words of one Goldman partner at the time. This is certainly a noteworthy relationship, but it’s one that has almost entirely escaped scrutiny. (snip)
In his four terms in Congress, Emanuel has raised $74,750 from Goldman, making the firm his number four source of funds.
Goldman has helped Emanuel. How has Emanuel helped Goldman? The most obvious answer, as mentioned in this column two weeks ago, is in Emanuel’s lead role in shepherding the “$700 billion” bailout—first proposed by former a Goldman CEO, Bush Treasury Secretary Henry Paulson—through the skeptical House.
Of course, back in the Clinton days, Goldman benefited from NAFTA and the bailout of the Mexican currency, with Emanuel pushing NAFTA through Congress, and Rubin hammering out the peso bailout.
Did Goldman improperly funnel money to the Clinton campaign by subsidizing Emanuel’s salary in 1992? Did Goldman’s help to Clinton spur the Democratic president to push NAFTA and the Mexican bailout? The answers to these questions are opaque, and with Emanuel burrowed deep within the Obama White House, the continued relationship between Goldman Sachs and Obama’s right hand man won’t be easy to follow.
Watch which regulations of Wall Street Obama fights for. Watch where the bailout money goes. And don’t be surprised Goldman soon sitting pretty once again.
SOURCE http://www.washingtonexaminer.com/opinion/columns/TimothyCarney/ Goldman_Sach_Will_Be_Sitting_Pretty_With_Emanuel_in_the_Obama_White_House_112108.html
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"The Plan, Big Ideas for America" by Rahm Emanuel
FR Posted August 17, 2009 by HollyB
Page 58 Citizen service: “Every citizen needs to understand and accept the essence of the American bargain: Each of us has to do his or her part. While the rights of citizenship are explicit in our constitution, the implicit responsibilities are every bit as crucial. All Americans between ages of 18-25 will be asked to serve their country by going through 3 months of basic training, civil defense preparation, and community service. The nation will enlist them for 3 months of civilian service. They’ll be asked to report for basic civil defense training in their state or community.” Obama:” We cannot continue to rely on our military in order to achieve the national security objectives that we’ve set. We’ve got to have a civilian national security force that’s just as powerful, just as strong, just as well-funded”.
“Obama will call on citizens of all ages to serve America, by developing a plan to require 50 hours of community service in middle school and high school and 100 hours of community service in college every year”.
HR 1388 Serve America Act will call on citizens of all ages to serve”
For more information on HR1388 http://www.govtrack.us/congress/bill.xpd?bill=h111-1388
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Dual citizen Rahm Emanuel surely got the top White House job as Obama’s COS based on his training on how to organize a “Civilian Security Force” (Candidate Obama campaigned on installing a “Civilian Security Force” on US soil).
Dual citizen Rham Emanuel has been trained to organize a civilian security force as a volunteer for “Sar’el”——the three-week Israeli Defense Forces (IDF) training program to train civilians. Looking at ACORN’s activities, and the BILLIONS Obama has given them, ACORN is primed for (and is already acting as) a “Civilian Security Force.”
BACKSTORY---ONE RAHM VERSION Circa 1991 Rahm Emmanuel volunteered in a program for civilian service in the IDF, and worked on brake components for APC’s and tanks in an IDF motor pool. He is lacking part of a finger and for many years went around claiming that he’d lost it in actions against the enemy in a tank. Now if Rahm fought in the military of foreign government, that would negate his American citizenship (US citizens forfeit their citizenship when they serve in the military of a foreign government).
SECOND RAHM VERSION Rahm volunteered for “Sar’el”——a three-week Israeli Defense Forces (IDF) training program (like US boot camp) where civilians are trained to assist the Israeli military. Civilians like Rahm lived on an IDF military base to get the proper training. A civilian volunteer, Rahm assisted the IDF during the 1991 Gulf War, repairing truck brakes in one of Israel’s northern bases. Rahm's father was an Israeli who was part of the underground resistance movement under the British Mandate.
FRIGHTENING STATEMENT Obama has stated that Rahm tells him "everything he needs to know about Israel."
Rahm Emanuel today is a dual Israeli-American citizen. It is not clear whether a dual citizen is permitted to serve in a high level US govt job that makes policy decisions for Americans.
Liz: was just going to post that piece on Emmanuel-— with these:
Yesterday I noted that Rahm Emanuel had said that Obama saw the AIG fiasco as a “big distraction” from efforts to fix the economy. Later in the day, Obama walked that back, asserting that the public was right to be “angry” about the whole mess and right to find it “consuming.”
Today, another senior Obama adviser, David Axelrod, is throwing in his lot with Rahm and the AIG-isn’t-a-huge-deal camp:
“People are not sitting around their kitchen tables thinking about AIG,” Axelrod said. “They are thinking about their own jobs.”
So are people upset about this, or aren’t they? Actually, people are thinking about the AIG disaster. Yesterday’s Gallup poll found that a big majority is very upset about it. Only 11% said they are “not particularly bothered” by it.
http://theplumline.whorunsgov.com/economy/axelrod-people-dont-care-about-aig-mess/
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[NOTE BELOW: Commonwealth Edison - Thomas Ayers
nvestment Banking »
Rahm Emanuel, Former Investment Banker
November 7, 2008, 11:08 am
Rahm Emanuel
President-elect Barack Obama’s choice to be his chief of staff, Rahm Emanuel, is already widely known in the halls of Washington for serving as an adviser to President Clinton, and most recently as a congressman from Illinois. But in between those two roles, Mr. Emanuel made millions of dollars on Wall Street as an investment banker with Wasserstein Perella, as the boutique firm was known at the time.
Despite having little experience or education in finance, Mr. Emanuel became a managing director at the firm’s Chicago office in 1999, helping to bring in business and seal deals.
According to a 2003 article in The Chicago Tribune, Mr. Emanuel was brought in by one of the firm’s founders, Bruce Wasserstein, who was one of President Clinton’s most active fund-raisers on Wall Street and is now the head of Lazard.
“Rahm did a great job for our firm,” Mr. Wasserstein told DealBook. “When Rahm worked with us at Wasserstein Perella, he showed a great ability to reconcile divergent interests for a constructive outcome.”
In his two-and-a-half-year stint as a banker, Mr. Emanuel — who once trained as a ballet dancer and was briefly a civilian volunteer on an Israeli military base — made $16.2 million, according to Congressional disclosures.
Mr. Emanuel worked on eight deals while at Wasserstein Perella, the two biggest of which involved politically connected utilities, The Tribune reported.
In one deal, he advised Commonwealth Edison, the power producer, in its $8.2 billion acquisition of Pennsylvania-based Peco Energy. In the other, he helped GTCR Golder Rauner, a Chicago-based venture capital and private equity firm, in its purchase of the SecurityLink home security unit from SBC Communications, now AT&T.
http://dealbook.blogs.nytimes.com/2008/11/07/rahm-emanuel-former-investment-banker/
Something else going on concerning Goldman-Sachs in July 2007 :
JUNE 2007 : (40 LETTERS THREATENING GOLDMAN SACHS ARE MAILED TO MEDIA OUTLETS AROUND THE COUNTRY --See 2008 OCTOBER SUPRISE MORTGAGE / FINANCIAL CRISIS, HANK PAULSON? ) ------“Exclusive: Teens behind terror ‘hoax,’ sez new letter” BY JOHN MARZULLI, DAILY NEWS STAFF WRITER Monday, August 6th 2007, 4:00 AM, http://www.nydailynews.com/news/wn_report/2007/08/06/2007-08-06_teens_behind_terror_hoax_sez_new_letter.html 414 posted on 08/06/2007 3:14:29 AM PDT by Cindy | To 413
JULY 2007 : (4-PAGE LETTER PURPORTEDLY FROM THE AUTHOR OF THE 40 THREAT LETTERS AGAINST GOLDMAN SACHS IS SENT TO A DAILY NEWS REPORTER; IT CLAIMS EARLIER 40 LETTERS WERE A HOAX BY 3 "MISGUIDED" TEENAGERS,--See 2008 OCTOBER SUPRISE MORTGAGE / FINANCIAL CRISIS, HANK PAULSON? ) The four-page letter, hand-printed in red ink on lined paper just like the original batch of 40 letters mailed to media outlets around the country in June, was sent to a Daily News reporter ...------“Exclusive: Teens behind terror ‘hoax,’ sez new letter” BY JOHN MARZULLI, DAILY NEWS STAFF WRITER Monday, August 6th 2007, 4:00 AM, http://www.nydailynews.com/news/wn_report/2007/08/06/2007-08-06_teens_behind_terror_hoax_sez_new_letter.html 414 posted on 08/06/2007 3:14:29 AM PDT by Cindy | To 413
AUGUST 5, 2007 : (NEW GOLDMAN SACHS LETTER CLAIMING EARLIER 40 LETTERS WERE A HOAX BY 3 "MISGUIDED" TEENAGERS--See 2008 OCTOBER SUPRISE MORTGAGE / FINANCIAL CRISIS, HANK PAULSON?) ARTICLE SNIPPET: “A new letter purportedly written by the author of terrorist threats against Goldman Sachs claims the whole thing was a hoax “conceived by three misguided teenagers.”
The four-page letter, hand-printed in red ink on lined paper just like the original batch of 40 letters mailed to media outlets around the country in June, was sent to a Daily News reporter last month and immediately turned over to federal investigators.
An FBI spokesman said yesterday that the new letter is still undergoing analysis at the agency’s lab in Quantico, Va., but it appeared to contain similarities to the original threats.
“The investigators believe the latest letter may have been written by the same person, but they’re not convinced the underlying story in the letter is the truth,” said spokesman James Margolin. The story revealed in the latest missive is nearly as bizarre as the warning sent out in the original letters.”-------“Exclusive: Teens behind terror ‘hoax,’ sez new letter” BY JOHN MARZULLI, DAILY NEWS STAFF WRITER Monday, August 6th 2007, 4:00 AM, http://www.nydailynews.com/news/wn_report/2007/08/06/2007-08-06_teens_behind_terror_hoax_sez_new_letter.html 414 posted on 08/06/2007 3:14:29 AM PDT by Cindy | To 413
I watched in amazement as these transactions unfolded. The WSJ and a few finance guru’s provided we little people with a fairly good analysis of the scam. Goldman shorted the garbage they sold, and got a huge taxpayer bailout through AIG. Nice work if you can find it ;-)