Monday, November 9, 2009

Here Is Nonsense from Blankfein

During the Arlidge visit with Goldman, CEO Lloyd Blankfein spewed about one piece of BS for every billion dollars Goldman has made since the financial crisis started:

Here's Blankfein or one of his lieutenants:
....with Lehman Brothers and Bear Stearns off the street, Merrill Lynch a crippled shadow of its former self, and neither Citigroup nor UBS the forces of old, Goldman has a bigger slice of a growing pie. "We didn’t f*** up like the other guys. We’ve still got a balance sheet. So, now we’ve got a bigger and richer pot to piss in," is how one Goldman banker puts it.
Are they serious? Do they actually think that, if government money wasn't shoveled to them from all different directions, they wouldn't have been crippled like Lehman or Bear Stearns?
Does Blankfein not acknowledge that it is maddening for most of us to watch Goldman gobble up so much cash while we struggle? Quite the opposite. He insists we should be celebrating his bank’s success, not condemning it. "Everybody should be, frankly, happy," he says. Can he be serious? Deadly. Goldman’s performance, he argues, is the firmest indication of a nascent economic recovery that will benefit not just him and his firm but all of us. "The financial system led us into the crisis and it will lead us out."
Actually it is evidence of the warped recovery. Bailout money went to Goldman Sachs and a select few others, the rest of the economy is in a swamp. the height of the crisis, the Federal Reserve broke with an 80-year-old tradition and let Goldman turn itself from a pure investment bank into a bank holding company. This meant it could borrow funds at the same cheap rate as commercial banks for as long as it wanted. Blankfein says Goldman changed status not for the money, but because it had become clear, following the collapse of Bear Stearns and Lehman, that the market had lost faith in the ability of the US Securities and Exchange Commission to regulate investment banks. Being regulated by the central bank, the Federal Reserve, would help to restore confidence in the financial system as a whole.
This is absurd. Lloyd if it isn't about access to cheap Fed money, will you pledge not to borrow any money from the Fed? Will you turn over to the Treasury the difference between the interest you paid by borrowing from the Fed and what it would have cost you to borrow in the markets?

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