Yeah I’m especially comforted by how the CEO of Goldman Sachs had taken part of the decision making process in that whole deal with Paulson...
Have the shills whom are advocating for bailout woken up yet?
Gretchen Morgenson is a star reporter. I noticed from the accompanying video that she is also very attractive.
Pretty good article. Yeah, no problem with Goldman’s exposure to AIG-insured assets, hey, just their main trading partner, no problem here, let’s just ask Henry Paulson why he bailed out AIG in such a hurry. Sure. Just a quirky coincidence, I’m sure. Maybe George Noory has the answers or could invite on a guest to blather about it. Ya think?
Nothing to see here, just mosey along.
bttt
Corruption, conflict of interest, self-dealing bump!
Paulson needs to step down! If he doesn’t tender his resignation PDQ, the president should fire him. (I know, that’s not going to happen.)
I think Paulson needs to resign.
I have a simple question to anyone here that understands this business- what happened to PMI (Private Mortgage Insurance)? This insurance was (is?) required by all home buyers of conventional mortgages, and it’s purpose is to indemnify LENDERS against defaults, as I understand it. Where are they? What have all these homeowners been paying for? Why isn’t this mess insured?
i am not taking any specific spin on this story, but one who thinks goldman is not the most connected firm on the street with Treasury is blind.
Ping.
This has to be shouted out from the rooftops:
Paulson left GS. His successor, Blankfein, was in the room when it was decided that OUR money would be used to bail out AIG. AIG was on the hook to GS to the tune of $20 billion. Fast forward to LEH, Paulson lets it go bankrupt, “drawing a line in the sand.” Then when GS comes hat in hand last week, all of a sudden there is this overiding, pressing, world-ending crisis, armageddon, god save us all need for a bailout. Paulson is so conflicted it is beyond disgusting. He needs to go. And if Bush is listening to this guy, he deserves all of the opprobrium heaped upon him.
http://online.wsj.com/article/SB122266132599384845.html?mod=rss_markets_main
“Back in New York, the situation at Morgan Stanley and Goldman Sachs was worsening rapidly. In the middle of the trading day, at about 2 p.m., Morgan Stanley CEO John Mack dispatched an email to employees: “What’s happening out here? It’s very clear to me — we’re in the midst of a market controlled by fear and rumors.” By the end of Wednesday, employees at Morgan Stanley and Goldman were shell-shocked. Morgan Stanley’s shares had fallen 24% to $21.75 while Goldman, the largest investment bank by market value, fell 14% to $114.50.
By Thursday, Messrs. Paulson and Bernanke decided that the fallout presented too great a threat to the financial system and the economy. In the biggest government intervention in financial markets since the 1930s, they extended federal insurance to some $3.4 trillion in money-market funds and proposed a $700 billion plan to take bad assets off the balance sheets of banks.
Three days later, Goldman Sachs and Morgan Stanley applied to the Fed to become commercial banks — a historic move that ended the tradition of lightly regulated Wall Street securities firms that take big risks in the pursuit of equally big returns.”
We hear the Rats and the RINOs shrieking and moaning about "the crisis we have to address". If the crisis they were talking about was the crisis of embedded corruption and self interest in both the legislative and executive branches, I'd be with them one hundred percent.
And these people up on the Hill wonder why we’re so suspicious of even a “good” bailout bill, if one could be created? THIS IS WHY.
There may well need to be some sort of government intervention to steady the credit markets, I don’t know. It’s all too complex for me to understand. But when we see things like this, automatically, we think that ANY intervention is being done to support the “inner circle” on Wall Street. This incestuous relationship between Congresscritters, Paulson, regulators, Wall Street execs...that’s why those of us out here in flyover country are willing to risk a partial collapse of the US economy and a painful recession. Because we’re sick of these people.
}:-)4
The more I keep hearing how the world is coming to an end the more I'm surprised that it hasn't.
Goldman is the firm that other Wall Street firms love to hate. It houses some of the world’s biggest private equity and hedge funds. Its investment bankers are the smartest. Its traders, the best. They make the most money on Wall Street, earning the firm the nickname Goldmine Sachs. (Its 30,522 employees earned an average of $600,000 last year — an average that considers secretaries as well as traders.) *snip* While the credit crisis swamped Wall Street over the last year, causing Merrill, Citigroup and Lehman Brothers to sustain heavy losses on big bets in mortgage-related securities, Goldman sailed through with relatively minor bumps. In 2007, the same year that Citigroup and Merrill cast out their chief executives, Goldman booked record revenue and earnings and paid its chief, Lloyd C. Blankfein, $68.7 million — the most ever for a Wall Street C.E.O. *snip* By the weekend, it was clear that Goldman’s options were to either merge with another company or transform itself into a deposit-taking bank holding company. So Goldman did what it has always done in the face of rapidly changing events: it turned on a dime. “They change to fit their environment. When it was good to go public, they went public,” said Michael Mayo, banking analyst at Deutsche Bank. “When it was good to get big in fixed income, they got big in fixed income. When it was good to get into emerging markets, they got into emerging markets. Now that it’s good to be a bank, they became a bank.” The moment it changed its status, Goldman became the fourth-largest bank holding company in the United States, with $20 billion in customer deposits spread between a bank subsidiary it already owned in Utah and its European bank. Goldman said it would quickly move more assets, including its existing loan business, to give the bank $150 billion in deposits. Even as Goldman was preparing to radically alter its structure, it was also negotiating with Mr. Buffett, a longtime client, on the terms of his $5 billion cash infusion. Mr. Buffett, as he always does, drove a relentless bargain, securing a guaranteed annual dividend of $500 million and the right to buy $5 billion more in Goldman shares at a below-market price. While the price tag for his blessing was steep, the impact was priceless. “Buffett got a very good deal, which means the guy on the other side did not get as good a deal,” said Jonathan Vyorst, a portfolio manager at the Paradigm Value Fund. “But from Goldman’s perspective, it is reputational capital that is unparalleled.” EVEN if the bailout stabilizes the markets, Wall Street won’t go back to its freewheeling, profit-spinning ways of old. After years of lax regulation, Wall Street firms will face much stronger oversight by regulators who are looking to tighten the reins on many practices that allowed the Street to flourish. For Goldman and Morgan Stanley, which are converting themselves into bank holding companies, that means their primary regulators become the Federal Reserve and the Office of the Comptroller of the Currency, which oversee banking institutions. Rather than periodic audits by the Securities and Exchange Commission, Goldman will have regulators on site and looking over their shoulders all the time. The banking giant JPMorgan Chase, for instance, has 70 regulators from the Federal Reserve and the comptroller’s agency in its offices every day. Those regulators have open access to its books, trading floors and back-office operations. (That’s not to say stronger regulators would prevent losses. Citigroup, which on paper is highly regulated, suffered huge write-downs on risky mortgage securities bets.) As a bank, Goldman will also face tougher requirements about the size of the financial cushion it maintains. While Goldman and Morgan Stanley both meet current guidelines, many analysts argue that regulators, as part of the fallout from the credit crisis, may increase the amount of capital banks must have on hand. More important, a stiffer regulatory regime across Wall Street is likely to reduce the use and abuse of its favorite addictive drug: leverage.
I especially liked this passage:
"Of course, as this intricate skein expanded over the years, it meant that the participants were linked to one another by contracts that existed for the most part inside the financial world’s version of a black box."
To the average guy, this whole financial system is just voodoo and this passage encapsulates that feeling very nicely. It's also one of the main reasons that a bailout is so strongly opposed. There's a widespread feeling that this has all come about because of shady deals made by fast operators who have flown under the radar. This affair will keep journalists and documentary makers busy for years.
This appears to be a good article. Thanks!
Ping.