Bush/Obama bank bailout gifted Goldman Sachs $2.9 BILLION straight to its trading account

[brentspeak]

Considering that Goldman Sachs alumni are littered throughout Obama's administration, it's no surprise that Eric Holder has taken no real action against Goldman Sachs.

As if the general public needed more proof that the bank bailout was the greatest swindle in American history.

http://www.huffingtonpost.com/2011/01/26/goldman-sachs-aig-backdoor-bailout_n_814589.html

Goldman Sachs Got Billions From AIG For Its Own Account, Crisis Panel Finds

First Posted: 01/26/11 09:32 PM Updated: 01/26/11 10:23 PM
Shahien Nasiripour

Goldman Sachs collected $2.9 billion from the American International Group as payout on a speculative trade it placed for the benefit of its own account, receiving the bulk of those funds after AIG received an enormous taxpayer rescue, according to the final report of an investigative panel appointed by Congress.

The fact that a significant slice of the proceeds secured by Goldman through the AIG bailout landed in its own account--as opposed to those of its clients or business partners-- has not been previously disclosed. These details about the workings of the controversial AIG bailout, which eventually swelled to $182 billion, are among the more eye-catching revelations in the report to be released Thursday by the bipartisan Financial Crisis Inquiry Commission.

The details underscore the degree to which Goldman--the most profitable securities firm in Wall Street history--benefited directly from the massive emergency bailout of the nation's financial system, a deal crafted on the watch of then-Treasury Secretary Henry Paulson, who had previously headed the bank.

"If these allegations are correct, it appears to have been a direct transfer of wealth from the Treasury to Goldman's shareholders," said Joshua Rosner, a bond analyst and managing director at independent research consultancy Graham Fisher & Co., after he was read the relevant section of the report. "The AIG counterparty bailout, which was spun as necessary to protect the public, seems to have protected the institution at the expense of the public."

October 1, 2008: Obama on the Senate floor, http://metavid.org/wiki/Stream:Senate_proceeding_10-01-08_00/2:38:38/2:53:07">urging his colleagues to quickly pass Bush's TARP bill.

[ProSense]

1. The article doesn't mention Obama? Still,

from the OP article:

The fact that a significant slice of the proceeds secured by Goldman through the AIG bailout landed in its own account--as opposed to those of its clients or business partners-- has not been previously disclosed. These details about the workings of the controversial AIG bailout, which eventually swelled to $182 billion, are among the more eye-catching revelations in the report to be released Thursday by the bipartisan Financial Crisis Inquiry Commission.

About the Commission

In the wake of the most significant financial crisis since the Great Depression, the President signed into law on May 20, 2009, the Fraud Enforcement and Recovery Act of 2009, creating the Financial Crisis Inquiry Commission. The Commission was established to "examine the causes, domestic and global, of the current financial and economic crisis in the United States."

The 10 members of the bi-partisan Commission, prominent private citizens with significant experience in banking, market regulation, taxation, finance, economics, housing, and consumer protection, were appointed by Congress on July 15, 2009. The Chair, Phil Angelides, and Vice Chair, Bill Thomas, were selected jointly by the House and Senate Majority and Minority Leadership.

The FCIC is charged with conducting a comprehensive examination of 22 specific and substantive areas of inquiry related to the financial crisis. These include:

<...>

In its work, the Commission is authorized to hold hearings; issue subpoenas either for witness testimony or documents; and refer to the Attorney General or the appropriate state Attorney General any person who may have violated U.S. law in relation to the financial crisis.

On November 17, 2010 the Commission resolved, by majority vote, to deliver its report in January 2011, rather than on December 15, 2010. The Commission will conclude its operations by February 13, 2011, as prescribed.

More on the report

[karynnj]

5. The op is not even correct

AIG needed the money to pay out on credit swaps - and it was well known that the brokerage houses held them. I doubt anyone really following the financial problems did not know that Goldman Sacks likely held many of them. These swaps were purchased by American and international financial institutions as they thought it made their investments safe. Letting AIG fail would have caused a huge number of failed institutions here and abroad. Later, it was discussed in detail in Sorkin's book.

Not to mention - it was the TREASURY DEPARTMENT - ie PAULSON who bailed out AIG in September. TARP was passed in October.

That GS benefited was ALL common knowledge when Paulson - not the Senate - bailed out AIG. Here's the first article found by goggle. http://www.nakedcapitalism.com/2008/09/aig-bailout-saved-goldman.html

Note this was in SEPTEMBER, 2008. When was TARP passed - OCTOBER, 2008. http://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=110&session=2&vote=00213 Obama spoke in favor of TARP.

The OP hates financial corporations so much that he would have preferred no bail out and their failure - even as many people feared the enormous consequences. Talk about cutting off your nose to spite your face. Either that or he is stil angry that Edwards lost.

[brentspeak]

8. Maybe you have a point: We should enjoy being lied to and robbed

Obama's complicity in it makes it less vile, don't you think?

"If these allegations are correct, it appears to have been a direct transfer of wealth from the Treasury to Goldman's shareholders," said Joshua Rosner, a bond analyst and managing director at independent research consultancy Graham Fisher & Co., after he was read the relevant section of the report. "The AIG counterparty bailout, which was spun as necessary to protect the public, seems to have protected the institution at the expense of the public."

"At the time, the idea was the sucker could go down because there wasn't enough liquidity in the system, money wasn't moving, and you could see a domino effect,"
said Ann Rutledge, a principal at R&R Consulting in New York, which specializes in structured finance.

In reality, she contends, those fears were overblown: There was ample money in the financial system. Rather, individual institutions did not have enough cash on hand to survive their losses, she asserts. But the fear of a broader liquidity crisis was used as justification for what now appears to have been a backdoor means of bailing out Goldman, said Rutledge.

[karynnj]

12. Did you read my link? PAULSON bailed out AIG - not TARP

Obama had NOTHING to do with Paulson's decision.

The fact is that Paulson knew EXACTLY where the money that was given to AIG would go. The NYT knew where the money was going.

Ann Rutledge is at odds with every economist and financial analyst that I have ever read. Whether she was right or wrong, the policy makers heard far more people arguing for the need to act. Why not do an analysis of what happens if each side is wrong. If Rutledge were correct - it wouldn't be needed and it would lead to AIG, GS and at least a few other institutions getting money they didn't deserve - and which they were required to pay back with interest. So - they got a loan that helped them which they didn't deserve. If all the other analysts were right, NOT bailing out would have led to catastrope.

What would a prudent policy maker do.

Just because you want to believe Rutledge does not mean that it was certain she was the one who had it right.

[slipslidingaway]

20. Wall Street's Collapse to Be Mystery Forever

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=439&topic_id=283977&mesg_id=289134

"Predictable Failure

The FCIC’s failure was predictable from the start. To examine the causes of the financial crisis, Congress created a bipartisan panel of 10 political appointees led by Democrat Phil Angelides, a former California state treasurer. What was needed was a nonpartisan investigation directed by seasoned prosecutors (like Pecora was) who know how to cross-examine witnesses and get answers.

Whereas Pecora had no fixed deadline, Congress gave the crisis commission until December 2010 to complete its inquiry. Witnesses who didn’t want to cooperate fully could simply milk the clock. The panel got a budget of less than $10 million to investigate all the causes of the financial crisis. Lehman’s bankruptcy examiner got $42 million to produce a 2,200-page report on the failure of a single company..."

[Name removed]

2. Deleted message

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[brentspeak]

3. Thanks for reiterating that taxpayer billions were funneled to GS

Very sporting of you.

"He didn't 'rob the victim blind'; he merely appropriated various items of value and apportioned them accordingly. Big difference, see?"

[karynnj]

7. They weren't "funneled"

AIG insured derivatives with credit swaps - and was caught when the derivatives failed in huge numbers. These swaps were purchased by American and international financial institutions as they thought it made their investments safe. Letting AIG fail would have caused a huge number of failed institutions here and abroad.

This was ALL common knowledge when Paulson - not the Senate - bailed out AIG. Here's the first article found by goggle. http://www.nakedcapitalism.com/2008/09/aig-bailout-saved-goldman.html

Note this was in SEPTEMBER, 2008. When was TARP passed - OCTOBER, 2008. http://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=110&session=2&vote=00213

[brentspeak]

14. LOL.

Do you enjoy making yourself look silly?

http://www.realclearmarkets.com/articles/2010/01/13/goldman_sachs-aig_its_likely_worse_than_you_think_97587.html

The Goldman Sachs-AIG scandal may be worse than we think. Former New York Fed President and current Treasury Secretary Timothy Geithner is being castigated for paying off AIG's counterparties - Goldman foremost among them - 100 cents on the dollar and then keeping these payments secret. But it seems likely that Goldman actually got much more than 100%. What is worse, Goldman may have received this windfall by trading on information that was deliberately withheld from the public.

[karynnj]

16. Real clear markets is a RW source

I was NEVER silly enough to back John Edwards as you did.

The fact is that nearly all of TARP has been repaid - and the expectation is that all of it will be.

[dionysus]

4. that's it. you've convinced me to switch to larouche. or lee mercer.

[Name removed]

6. Deleted message

Message removed by moderator. Click here to review the message board rules.

[karynnj]

9. Why yes he is - but he is angry because he would have prefered they fail

because they deserved it.

I can understand his anger that they caused all this pain and are now thriving, but bailing them out kept us from a far worse crash.

[brentspeak]

10. Dean Baker: Bank bailouts were unnecessary

http://www.guardian.co.uk/commentisfree/cifamerica/2009/may/18/us-economy-bank-bailout

How does this relate to the great bank heist of 2008-2009? It's very simple. If we actually got the scary bank runs described by the leading economists, then the Fed could just print the money needed to make the depositors whole. This additional money would not add in any real sense to the government's debt burden. We would just be replacing money that had effectively disappeared with new money. This would impose no additional interest costs, nor would it increase the threat of inflation.

The great benefit of going this route is that it would not use taxpayer dollars to reward the bankers executives who got us into this mess, and the bondholders and stockholders who were foolish enough to trust them with their money. We could honour all guaranteed deposits while allowing the bondholders and stockholders to enjoy the full fruit of their risk-taking. In other words, they would get wiped out, which is what is supposed to happen in a capitalist economy.

We would also replace the bank executives with more competent people, who presumably would work for much lower pay. As quickly as possible the banks would be restructured and then sold back to the private sector. That is the way things are supposed to work in a market economy.

In short, there were really no legitimate horror stories, at least from the taxpayers' side. The horror stories were only horror stories for the bank executives and their bondholders and shareholders. The economists who missed the housing bubble helped to deceive the public yet again and steer more taxpayer dollars in the pockets of this wealthy clique.

[karynnj]

13. There were plenty of economists taking the other side

Policy makers made a prudent choice not to take the risk of seeing if the dire predictions were wrong.

However, OBAMA HAD NOTHING TO DO WITH THE BAILOUT OF AIG. That happened before TARP.

[brentspeak]

15. "OBAMA HAD NOTHING TO DO WITH THE BAILOUT OF AIG."

March 3, 2009: http://online.wsj.com/article/SB123604469903515405.html">AIG's Fourth TARP Injection Increases Taxpayer Exposure

Oct 5, 2010: http://finance.fortune.cnn.com/2010/10/05/treasury-puts-aig-tarp-loss-at-5-billion/">Treasury puts AIG TARP loss at $5 billion

November 1, 2010: http://www.reuters.com/article/idUSTRE6A03EK20101101">AIG to get $22 billion in TARP funds for restructuring

[golfguru]

11. What business does the government have to bail out any private corp?

When the corporations make big NET profits, they do not share a dime
with the tax payers. So why should the tax payers bail our AIG, Goldman Sachs,
General Motors etc when they screw up?

[dionysus]

17. because not doing so could have resulted in a world-wide economic collapse.

worse than what actually happened.

how's the handicap btw?

[golfguru]

18. Handicap is lowest it's ever been hehehe

must be the equipment because I am in my 60's lol

But I am not convinced bailing out AIG was necessary.
Lehman was allowed to fall and nothing bad happened to main street.

The Trillions spent by the federal government for bank bailouts
could have been used MORE EFFECTIVELY by loaning the EXACT SAME
money to 95% of other banks which had sound balance sheets.

Let's face the truth, the Wall Street banks gambled on leveraged
financial instruments and when the housing bubble burst, they were
caught holding the bag. And ex Goldman chief Paulson came to their
rescue and the idiot Bush fell for it along with McCain & Obama later.

[mzmolly]

19. GS Stole this money. It was not approved by Obama.

Good gawd. Why the need for such negative spin?

[slipslidingaway]

21. Where were Geithner and Bernanke when this happened ...

Geithner was head of the NY Fed since 2003. Guess they did not have a clue as to what was going on.