Thursday, November 5, 2009

While Insider Trading Arrests Entertain the Masses, Goldman Continues to Skate

Matt Taibbi has a solid piece on Goldman below and, on another note, I hear DOJ is snooping around Taibbi's not so solid naked short selling story which Penson claims icontains a bogus video.

The deal contributed to the more than $14 billion that over 18 months was handed to Goldman Sachs , whose former chairman, Stephen Friedman, was chairman of the board of directors of the New York Fed when the decision was made. Friedman, 71, resigned in May, days after it was disclosed by the Wall Street Journal that he had bought more than 50,000 shares of Goldman Sachs stock following the takeover of AIG. He declined to comment for this article.

In his resignation letter, Friedman said his continued role as chairman had been mischaracterized as improper. Goldman Sachs spokesman Michael DuVally declined to comment.

AIG paid Societe General $16.5 billion, Deutsche Bank $8.5 billion and Merrill Lynch $6.2 billion.

~ via New York Fed’s Secret Choice to Pay for Swaps Hits Taxpayers –

It’s kind of amazing that with all the uproar over the Galleon business, nobody is making much hay over the recent revelations about the AIG bailouts, which make former Goldman chief and former New York Fed chairman Stephen Friedman look every bit as guilty of insider machinations as Raj Rajaratnam of the Galleon fund.

It’s impossible to grasp the totality of Friedman/Goldman’s grossness with regard to the AIG story without a little context. Remember the basic timeline. In the middle of the mortgage bubble, Goldman Sachs found a patsy-buffoon named Joe Cassano at a little corner of AIG called AIG Financial Products, or AIGFP. Cassano was recklessly writing hundreds of billions of dollars worth of credit default swaps for banks like Goldman and Deutsche, essentially insuring certain investments for these banks, including extremely risky mortgage-backed deals.

Goldman took out billions of these CDS positions with Cassano, who had written upwards of $440 billion of these CDS without having even a fraction of the money he would have needed to cover that bet in the event of a disaster of the type that actually ended up taking place, specifically a downgrade of AIG’s credit rating that forced Cassano to pony up wads of cash to cover those positions.

The important thing to remember about all of this is that just because Goldman was buying “insurance” from Cassano, that doesn’t mean they were being responsible. On the contrary: Goldman was creating well over ten billion dollars worth of exposure to a guy that they must have known was an absolute idiot. Now, in a world where actual capitalism existed, Goldman should then have been highly invested in making sure that AIG did not go under. A dead and bankrupt AIG should not have been good news to a company like Goldman Sachs , which had billions of dollars riding on AIG’s financial health.

Read the entire article here.

1 comment:

  1. Fanny, Freddie, and Obama
    By The Prowler
    on 9.8.08 @ 12:08AM

    When President George W. Bush nominated Henry Paulson to serve as Treasury Secretary, Republicans raised a red flag that Paulson, who, along with his wife, has strong ties to the Democrat party, would not be an honest broker with Republicans.

    That seems to have been borne out, with sources inside of Treasury reporting that Paulson briefed Sen. Barack Obama and his campaign advisers on the Fannie Mae and Freddie Mac bailout plan before offering such a briefing to the McCain campaign...


    Paulson and Obama
    By The Prowler
    on 9.26.08 @ 9:49AM

    When Sen. Barack Obama was given the floor to speak during White House negotiations, according to White House aides, he did so raising concerns about a House Republican alternative to the Paulson/Bernanke $700 billion bailout. But those concerns weren't necessarily his, as he was not aware of the GOP plan before reviewing notes provided him by Paulson loyalists in Treasury prior to entering the meeting.

    According to an Obama campaign source, the notes were passed to Obama via senior aides traveling with him, who had been emailed the document via a current Goldman Sachs employee and Wall Street fundraiser for the Obama campaign. "It was made clear that the memo was from 'friends' and was reliable," says the campaign source.

    The memo allowed Obama and his fellow Democrats to box in Republican attendees and essentially took what President Bush had billed as a negotiating meeting off the rails

    "Paulson and his team have not acted in good faith for this President or the administration for which they serve," says a House Republican leader...


    Bush didn't understand Paulson's bailout
    James Forsyth
    Tuesday, 15th September 2009, 8:57pm

    Latimer: "...the president was clearly confused about how the government would buy these securities. He repeated his belief that the government was going to "buy low and sell high," and he still didn't understand why we hadn't put that into the speech like he'd asked us to. When it was explained to him that his concept of the bailout proposal wasn't correct, the president was momentarily speechless. He threw up his hands in frustration.

    "Why did I sign on to this proposal if I don't understand what it does?" he asked."

    Forsyth: Indeed, Latimer reports White House gossip that at one meeting, an exasperated Bush told Paulson, "You've got to tell me what you're doing."


    The Chicago Ouroboros: Obama, Ayers, Oughton, Dohrn, Minow, Taibbi, Koch, and DARK POOL TRADING

    1965: Newton Minow joins Sidley-Austin

    1984: Bernardine "Dohrn" Ohrnstein joins Sidley-Austin

    circa 1986: Michelle LaVaughn Robinson clerks at Sidley-Austin

    circa 1987/1988: Newton Minow, Martha Minow, and William Ayers assist in Obama admission to Harvard Law School

    circa 1989: Barack Hussein Obama clerks at Sidley-Austin

    July 2009: Nell Minow dispatched to destroy Matt Taibbi