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Goldman (and other banks') "Hedges"
Karl Denninger ^ | Sunday, April 12. 2009 | Karl Denninger

Posted on 04/12/2009 3:19:34 PM PDT by dennisw

Goldman (and other banks') "Hedges"

There is a rumor about Goldman Sachs flying around on the street - allegedly they are about to report their second-best quarter in history, +$12 billion or so.

In addition, there is this from Bloomberg:

A 47 percent gain for the company’s stock price this year and a return to profitability in the first quarter may help Chief Executive Officer Lloyd Blankfein raise new money, analysts said. That might let Goldman Sachs, the sixth-biggest bank, return the cash received in October from the Treasury’s Troubled Asset Relief Program and shake off compensation and hiring restrictions imposed on banks that took the U.S. aid.

Gee, you don't think being paid by the taxpayer through AIG's "conduit" for losses that didn't (yet) happen at 100 cents on the dollar might have anything to do with that, do you?

And further (and potentially much worse) there is the repeated statement by Goldman executives that they were "fully hedged" against a potential counterparty default by AIG.

One wonders - was that "hedge" to be short the equity on AIG itself, perhaps?

Why is this important? 

Because if that's how Goldman hedged they got paid twice and the taxpayer literally got robbed.

Someone in Congress needs to look into this now; there are already rumblings of investigation.  Those rumblings need to get a lot louder and turn into subpoenas, not "polite inquiries." 

If in fact Goldman (or anyone else) was "hedged" against a possible credit loss from their CDS with AIG and they were able to collect on that hedge (no matter what it was) those payments through AIG need to be clawed back immediately as nobody is entitled to be paid twice for the same risk and reap what amounts to a windfall profit by quite literally engineering a multi-billion dollar transfer of funds from the Taxpayer to the firm!

This is not small potatoes either - we're talking $100 billion+ in aggregate with these various banks on a worldwide basis.

We the people deserve answers on this right now and if persons in our government handed these banks $100 billion dollars of our tax money for what was a covered bet, allowing them to collect twice on a risk that had not yet been realized (when at most they were entitled to collect once via their private hedging activity) every single person involved in that scandal must be immediately removed from office, prosecuted if possible, and every nickel of those funds must be clawed back by whatever means are necessary.



TOPICS: Business/Economy
KEYWORDS: banking; goldmansachs; greedybastards; wallstreet

1 posted on 04/12/2009 3:19:34 PM PDT by dennisw
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To: dennisw

If you like Karl Denninger let me know, I’ll start a ping list if enough do


2 posted on 04/12/2009 3:20:27 PM PDT by dennisw (0gabe our very own Kenyan subprime president)
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To: dennisw

Could someone please explain this in layman’s terms..because I’m not financial genius, but what I just read is making my head explode with anger.

Just a stupid question...if they have this much money....why don’t they GIVE BACK OUR MONEY.


3 posted on 04/12/2009 3:35:02 PM PDT by Hildy (Dr. King had a dream. Obama has an ELF who has a “plan”.)
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To: dennisw

If it’s Goldman Sachs they were thoroughly hedged...

You can bet on it.

Ping me, Daddy.


4 posted on 04/12/2009 3:39:20 PM PDT by Dinah Lord (fighting the Islamofascist Jihad - one keystroke at a time...)
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To: dennisw
You know of course, Dennis, that they will get away with it.

In fact, it's obvious that this is what the bailout was really intended to do.

Blankfein was on CSPAN the other day gloating about his upcoming good fortune and lecturing the Evil Americans about how they shouldn't have Buy American clauses, shouldn't criticise his H1B insourcing and Indian outsourcing, and should accept "tolerance and diversity". All said in that nasty little lecturing tone.

Why would the CEO of an "investment bank" be rattling on about topics like that? Especially one that was on the ropes just a bit ago?

Because those are the interests of himself and his benefactor in the Washington. The man who made sure the scam went down.

There may be some talk, but....nothing's going to happen.

5 posted on 04/12/2009 4:07:14 PM PDT by Regulator (Welcome to Zimbabwe! Now hand over your property)
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To: dennisw

ping me as well


6 posted on 04/12/2009 4:13:58 PM PDT by bubman
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To: dennisw

Watch this video to get the Geithner Plan explained at the 8-th grade level. Even a Congressional representative from the Bay State should be able to grasp the concepts.

http://activerain.com/blogsview/1012025/About-that-Geithner-plan


7 posted on 04/12/2009 5:40:57 PM PDT by pointsal
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To: dennisw

As soon as it was apparent that corrupt bankers could have their obscene “incomes for failure” limited, I knew they would find a way to be “successful” enough to end government supervision and get their compensation back to what they “deserve”.


8 posted on 04/12/2009 5:51:37 PM PDT by Prokopton
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To: Regulator

Blankfein..... I find him and anyone from Goldman to very annoying. Too bad Bin Ladin didn’t fly his airplanes into Goldman Sachs

Blankfein is listed as giving $7000 to Hillary. Blame Wall Street Democrats for this mess


9 posted on 04/12/2009 7:12:21 PM PDT by dennisw (0gabe our very own Kenyan subprime president)
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To: dennisw
Blame Wall Street Democrats for this mess

I do. And I don't consider them Americans, either.

10 posted on 04/12/2009 9:49:16 PM PDT by Regulator (Welcome to Zimbabwe! Now hand over your property)
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To: Regulator

http://www.goldmansachs666.com/


11 posted on 04/13/2009 1:03:24 AM PDT by dennisw (0gabe our very own Kenyan subprime president)
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To: dennisw

The left worked diligently to put it’s plan in place they needed the bankers and the low class trash acorn types to achieve the power to destroy America. Is it any wonder then having sold their soul the wealth turned out to be based on robbery, sham and deceit and the plan turns out to be no banker left behind? Of course nothing will be done.

http://www.businessinsider.com/henry-blodget-is-obama-in-wall-streets-pocket-2009-4

http://www.bloomberg.com/apps/news?pid=20601039&sid=aNMQDysdnKRc&refer=home


12 posted on 04/13/2009 6:30:23 AM PDT by FromLori (FromLori)
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