Goldman Sachs was not bailed out

Great Debates
61

Wells Fargo was about as adamantly opposed to the CPP as any bank (U.S. Bank and BB&T were also pretty opposed) including going to the media. They still ended up having to take the funds.

Also, I’m not saying that Goldman Sachs was so adamantly opposed to taking the funds that they were willing to take an antagonistic approach with the Federal Government. That’s usually not a very smart thing to do. They certainly played a good soldier and did what the government told them to do. I’m saying that they didn’t need the money, if it was voluntary they would probably not have taken it, and that they took the first chance to pay it back that they could. Add all of that up and they weren’t bailed out. Citibank was bailed out. AIG was bailed out. JPMorgan, State Street, Goldman Sachs, Morgan Stanley, and Bank of New York were not bailed out.

62

Longhorn Dave, just to satisfy my curiosity, could you tell me what it was that inspired this thread, particularly the title?

Thanks.

63

Instead why don’t you admit you’re wrong about this. Here it is in black and white :

FASB rejected requests from banks to let them apply the fair-value change to their year-end financial statements for 2008. While the new standard takes effect for earnings reports filed at the end of June, FASB said companies could apply it to their first-quarter financial statements.

http://www.bloomberg.com/apps/news?pid=20601087&sid=agfrKseJ94jc

Now I guess you’re going to nitpick over whether “suspend” is the same as “ease”, but the bottom line is that m to m isn’t currently applicable and hasn’t been since the start of this year.

The Federal Reserve have paid out hundreds of billions in bailouts that they’re refusing to talk about publicly. Here’s fed topper Ben Bernanke talking about it in Senate testimony, under oath :
*Senator Sanders: “Will you tell the American people to whom you lent $2.2 trillion of their dollars?”

Bernanke: “No” *

Now the Senator wasn’t claiming that the whole Fed balance sheet is unnaccounted for, but there is a great big multihundred billion hole we know nothing about.

Now maybe that money hasn’t been lent through the TALF, maybe the Fed have created a bunch of double secret bailout programs we don’t know about. But the TALF, Maiden Lane etc. are the ones most likely to be doing the bailing out.

The bottom line is that however they’re doing it, via the TALF and other existing bailout mechanisms or by double secret ones, the Fed is bailing effectively half a dozen major players out to the tune of hundreds of billions of literally unnaccounted dollars. And as one of those major players, isn’t it a fair assumption that GS is being bailed out for at least some of that money?

Try not to turn this into more nitpicking or start to criticise my spelling or whatever. I’m not asking you 15 different things, I’m basically asking you one thing, so don’t keep going off at tangents. let’s deal with the substantive issue here.

64

Sure. I was inspired to write it when I saw this post the day before. It wasn’t the first time that I have seen it, but that is what caused me to pull the trigger. I also have a relationship with JPMorgan and have seen them similarly talked about. I initially was going to make the post about both JPMorgan and Goldman but decided to keep it just Goldman at the last minute.

I have absolutely no love for Goldman Sachs, by the way. As evidence of this, my one and only other post on them on this message board was accusing them of oil price manipulation.

65

Again, thank you. It comes off as much less apropos-of-nothing-in-particular, now.

Of course, had it been I bringing up the subject, I might have thought to post a link to my OP in that thread.

:slight_smile:

66

Do we even live on the same planet? Your cite 100% supports exactly what I have been saying this entire thread and 100% refutes what you have been saying. Either you are trying to make a joke or your reading comprehension skills are abismal.

Point 1) Not suspended, but eased. This is what I have been stating the entire time and the opposite of what you have been saying.
Point 2) Not effective until 6/30/09 except for early adoption. Exactly as I have said and exactly opposite of what you have said.

Your summary bottom line is absolutely false and you proved it with your own link.

Finally, in case you really are not joking and think that MTM currently isn’t applicable, I will bet any amount of money that I can name you 25 companies at the 6/30/09 reporting period that will report unrealized gains or losses resulting from marking to market their assets.

67

So are you going to completely ignore my post on TALF? First, it’s exactly on point to what you posted. Second, once we get past TALF we can move on to your other boogeyman, Maidan Lane.

68

Here’s what you said a few posts ago :

How many times do I have to state it? MTM easing isn’t effective until the 6/30/09 reporting period?

And Bloomberg tells us :

*While the new standard takes effect for earnings reports filed at the end of June, FASB said companies could apply it to their first-quarter financial statements. *

and of couse you’re nitpicking over “easing” versus “suspending”.

I’m happy to let our fellow forumers read this and decide which of us knows what he’s talking about and which of us is a clueless buffoon.
And you’re dodging the main issue, which is :

The bottom line is that however they’re doing it, via the TALF and other existing bailout mechanisms or by double secret ones, the Fed is bailing effectively half a dozen major players out to the tune of hundreds of billions of literally unnaccounted dollars. And as one of those major players, isn’t it a fair assumption that GS is being bailed out for at least some of that money?

69

  1. The TALF is meant to provide liquidity in the Asset-backed securities market to any company – hedge fund, foreign-owned U.S. subsidiary, mutual fund, private equity fund.

  2. The TALF covers AAA assets with a maturity under 5 years for credit card and auto loans.

  3. The TALF is non-recourse, meaning the government can seize the toxic assets if the borrower doesn’t repay, but the government has no other claim on the assets of the debtor. That means you can get a loan from the government in return for toxic assets, but if you do not pay the loan back, no penalty is exacted except seizure of the assets. This is very much like a mortgage agreement.

  4. Seized toxic assets will be put into a Special Purpose Vehicle controlled by the U.S. government. Translation: please dump your toxic assets with us. We will take them off your hands and have no recourse to any other assets you own.

That’s how the TALF works, that we know about anyway. It’s a huge bailout for anybody wanting to dump their toxic paper onto the Fed at the value they want and get shiny new dollars in return, which they may or may not then loan (and the numbers show they’re not doing a lot of loaning.)

But this is just you going off at a tangent again. Here’s the question you keep refusing to answer :

The bottom line is that however they’re doing it, via the TALF and other existing bailout mechanisms or by double secret ones, the Fed is bailing effectively half a dozen major players out to the tune of hundreds of billions of literally unnaccounted dollars. And as one of those major players, isn’t it a fair assumption that GS is being bailed out for at least some of that money?

70

You are hopeless. As you see clearly from my first post on the subject, I know that early adoption is possible.

Now, you claim it was effective at the beginning of the year.

Finally, how in the world is it nitpicking to say it wasn’t suspended, when it clearly wasn’t. Do you not think that suspended implies that MTM accounting is no longer in effect? That is clearly not the case. The existing MTM rules have been eased. Once again, I have used the word “eased” since the beginning while you continuously incorrectly use “suspended”. I corrected you on my very first post on the subject.

71

I’m happy to let our fellow forumers look at what we both wrote and decide which of us knows what he’s talking about.

72

No shit. I know all of that. Explain why it would be a bailout for someone like Goldman Sachs who is the one providing the loan to purchase someone else’s toxic assets.

What I am trying to do is act in a logical way, which is to systematically go through the various ways that you think they were bailed out. You mentioned TALF and I am trying to get that out of the way before I move on to the next supposed bailout.

Now are you seriously stating that you want me to prove that they were not bailed out by some secret government program that nobody knows about? Fine, I admit that I can not prove they weren’t bailed out by that or magic either for that matter. I can prove that they were bailed out by the non-double secret ways.

Also, no it is not a fair assumption that GS is being bailed out in some double secret way that nobody knows about. That is called a lunatic conspiracy theory.

73

Sounds great.

74

Huh!?

With all due respect, but seems to me you’re not familiar with how investment firm like GS operates, the core business model consisting of being reliant on short-term money market liquidity (i.e. ability to short sell and buy securities). Someone who is at the edge of leverage capacity cannot be considered to be loan originator - they just don’t have the capital.

Now, the reason Lehman collapsed is due to that exact market being frozen all the while their due payment coming up. In other words, the size of debt due over matched their ability to raise capital; therefore, fail.

It is also a fact that GS converted into a holding bank for several reasons two of them important for survival: one, instantly becoming part of the bailout qualifying club (including the chained and netting transactions) and two, balance sheet undergoes certain changes where certain assets change class thus getting a different GAAP and reporting treatment (details on this are a bit murky due to lack of disclosure).

And finally, without a safety net (US Government stepping in), those closest to the edge of the cliff (GS) have most to lose. However, once the safety net is established, exactly those who risked most, gain the most.

75

GS have the ability to dump as much of their toxic assets into the TALF as they want. How much they have done with this or other programs we don’t know as the Fed won’t release the numbers*.

I’m not asking you to prove that GS is being bailed out or how they’re being bailed out. You’re just going off on tangents again, trying to dodge the question. What I’m saying is that the Fed has lent out hundreds of billions of dollars that they won’t disclose. That’s a matter of public record. Now given that hundreds of billions of dollars in secret bailouts is a fact, and given that GS is a major/main player in the markets that went toxic and caused the need for the bailouts, isn’t it a reasonable assumption that GS got some of those hundreds of billions?

*Don’t nitpick this either. Yes, they’ve released TALF numbers but they’re either releasing bs numbers for these programs to hide where the hundreds of billions went or they’re lending the money through progams we don’t know about. just answer the question and not tangentially. Here it is again :

given that hundreds of billions of dollars in secret bailouts is a fact, and given that GS is a major/main player in the markets that went toxic and caused the need for the bailouts, isn’t it a reasonable assumption that GS got some of those hundreds of billions?

76

I misstated it. I realized a few minutes after I posted but haven’t had the chance to correct until now. I said Goldman is making the loans. I meant to say Goldman is receiving the loans to buy the toxic assets. This is clear if you compare to my original post on the subject. My mistake.

77

I’m no longer responding to your posts on this subject as I believe you have left the realm of rational thought and are simply a conspiracy theorist.

78

I’ve covered this multiple times in this thread. First, Goldman converted to a bank holding company before the CPP existed, so it is illogical to say they did so in order to be eligible for bailout funds. Second, you’re leaving out one of the most important reasons why they became a bank holding company: for the stability in funding through the ability to raise deposits and borrow at the Fed window (although the loosely had these abilities before hand). Third, it’s not a bailout to allow them to become a bank holding company since they could have done so at any time prior to this (within reason). They could have changed there status in any random year such as 2002, 2004, 2006, 2007, and they chose to in 2008. They did so and now must operate under the regulations and capital requirements of a bank. How is that a bailout?

79

Also, you’re way overstating this. Goldman certainly has the ability to make loans. They have a significant portfolio on their balance sheet. It’s not their core line of business or anything, but they along with the other investments banks did make commercial loans.

80

I think we’ve hit the edge of your ignorance.

It’s a matter of public record that the Fed has lent out hundreds of billions, won’t disclose who to or what they took as collateral. Here’s a Texas newspaper article pointing this out :

*The Federal Reserve is refusing to identify the recipients of almost $2 trillion of emergency loans from American taxpayers or the troubled assets the central bank is accepting as collateral.

Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson said in September they would comply with congressional demands for transparency in a $700 billion bailout of the banking system. Two months later, as the Fed lends far more than that in separate rescue programs that didn’t require approval by Congress, Americans have no idea where their money is going or what securities the banks are pledging in return.

“The collateral is not being adequately disclosed, and that’s a big problem,” said Dan Fuss, vice chairman of Boston-based Loomis Sayles & Co., where he co-manages $17 billion in bonds. “In a liquid market, this wouldn’t matter, but we’re not. The market is very nervous and very thin.”

Bloomberg News has requested details of the Fed lending under the U.S. Freedom of Information Act and filed a federal lawsuit Nov. 7 seeking to force disclosure.

The Fed made the loans under terms of 11 programs, eight of them created in the past 15 months, in the midst of the biggest financial crisis since the Great Depression.

“It’s your money; it’s not the Fed’s money,” said billionaire Ted Forstmann, senior partner of Forstmann Little & Co. in New York. “Of course there should be transparency.”

Federal Reserve spokeswoman Michelle Smith declined to comment on the loans or the Bloomberg lawsuit. Treasury spokeswoman Michele Davis didn’t respond to a phone call and an e-mail seeking comment.*

http://www.chron.com/disp/story.mpl/headline/biz/6104541.html

Are the people and institutions quoted in this story all wacky conspiracy theorists too?
And in congressional testimony today Bernanke just refused to say which banks he’d given half a trillion dollars to in dollar swaps. You can watch that here :

So I think our fellow forumers can look at the evidence and work out whether you’ve actually got a case that I’m some nutty conspiracy theorist or whether you have to run away from the argument making ridiculous claims to try and cover up the fact that you don’t know what you’re talking about.

Surprised to see a Texan wave the white flag of surrender so easily. Surely you could have continued to bs and obfuscate a while longer? And what “relationship” do you have with JP Morgan? Are you the janitor there?