Posted on 04/14/2009 6:55:39 AM PDT by Arguendo
NEW YORK, April 14 (Reuters) - Goldman Sachs Group Inc has a "duty" to return the $10 billion it received in a U.S. government bailout, as it moves to benefit from an expected recovery in capital markets, its chief financial officer said.
The company was Wall Street's most profitable before converting to a commercial bank last September. It returned to profitability in the first quarter, on Monday posting a $1.66 billion profit after preferred stock dividends, more than double what analysts had forecast.
Goldman sold $5 billion of common stock at $123 a share, and plans to use the proceeds and other resources to repay the taxpayer money received under the government's Troubled Asset Relief Program.
Repaying the funds would free the New York-based company from government restrictions on its business, including caps on executive pay.
"We never believed the investment of taxpayer funds was intended to be permanent," CFO David Viniar said on a conference call. "We view it as our duty to return the funds, as long as we can do it without negatively impacting our financial profile, or ability to act as a central liquidity provider to the global capital markets."
(Excerpt) Read more at reuters.com ...
Of course when they were losing money, they were literally banging down the doors of Congress demanding a bailout. Way to "privatize the profits and socialize the losses." What a commie.
Can anyone tell me what happens when TARP money is repaid. Does it go back in the Treasury to pay for debt, or is the government wasting it somewhere else?
To be fair, when they pay this back the government won’t have born any of their losses. With TARP healthy companies like Goldman got terms close to what they could get in the market, so it wasn’t much of a bailout. The real bailout went to sick banks like Citi that got money on the same terms—far better terms than they could have gotten in the market.
However, Goldman did benefit from the bailout: if AIG hadn't been bailed out, Goldman would have had massive problems, because AIG used the money it got to pay Goldman and a bunch of other banks. It should have been up to the banks to do due diligence of their counterparties...
It goes back to the Treasury, not to some fund Congress can spend on whatever it wants. Of course, it’s not like Congress has even waited until they had money to spend it, so this is a small comfort.
I’ve seen articles claiming that Goldman did in fact do that due diligence, and demanded that AIG collateralize all their positions well before other banks were worried about the credit crisis’ impact on AIG. So it was AIG’s other creditors that benefited more.
What does GM call it?
Riiiight!
How about repaying the $B’s that they received from AIG? Is Goldmans going to repay that too? I doubt it.
Looks like Goldman Sachs decided that Capitalism was a much better bet then socialism and having the Government tell them what to do. ZERO may be making more converts to Capitalism after his power grab. GS does not want to be told what they can pay their executives so they are putting a kabash on socialism and being controlled by ZERO and his Administration.
Why should they? AIG owed it to them, and in all likelihood their positions were collateralized so they would have been paid even if the government hadn’t bailed out AIG.
Interesting that the $1 a year CEO of AIG who paid GS $12 billion or so is also the holder of $3.5 million in GS stocks. Oh, and he was a GS board member.
While GS lost money in Q4, they were profitable for the year thanks to AIG.
It's also interesting that GS alums Paulson and Geithner have been running the show where GS emerges stronger, profitable, and all of their rivals diminshed or gone.
Government Sachs is in spin mode. These are not the good guys. They're like a worldwide government sanctioned mafia. They were the motive force in the run up in oil prices last year. They've taken the mantle from Enron in pushing a carbon trading scheme, where GS makes out like a bandit.
From Karl Denninger:
“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.”
There would be nothing illegal about this. If the government wants to bail out AIG, it has to bail out all of AIG's creditors, not just those dumb enough not to protect themselves against AIG's failure.
There's your clearest possible example of a Marxist mentality right there. No success permitted, it hurts the feelings of the unsuccessful.
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