Goldman Sachs to return bailout funds.

[Occam Bandage]

Six months after accepting a financial lifeline from Washington, a newly profitable Goldman Sachs is pushing to return the billions of taxpayer dollars that it received in an effort to extricate itself from heightened government control.

Goldman, which rode out the final, tumultuous months of 2008 with the help of a federal rescue, reported strong quarterly profits on Monday and said that it would seek to raise money in the capital markets to repay the government.

If successful, Goldman would become the first major bank to return funds received under the Troubled Asset Relief Program, or TARP. Such a step would probably enable Goldman — long one of the most lucrative places to work on Wall Street — to free itself from government-imposed restrictions on compensation.

Many analysts welcomed the news as the latest in a series of signs that the financial industry is stabilizing.

(More at link)
http://www.nytimes.com/2009/04/15/business/15goldman.html

This is a heartening sign.

[dionysus]

1. you just spoiled a bunch of peoples misery by posting this.

:thumbsup:

[Skwmom]

43. Where's the money they received via AIG?

I read that the number of contracts they entered into with AIG was contrary to prior practices (where they would enter into contracts with multiple parties to spread the risk).

Hmmmm. Amazing how AIG sold so many wacky insurance policies to Goldman Sachs and then used government money to pay off those contracts 100%. I can't help but wonder if the whole AIG scheme wasn't cooked up by Summers or one of the other "geniuses" to cover the losses of Goldman Sachs and others.

So I guess we are supposed to forget about the bailout Goldman Sachs received via AIG? Oh, that's right. This whole thing is just too difficult for the American Public to understand.

[mkultra]

45. I would invite you to back up your slam

with a link that shows where Sachs ramped up contracts with AIG. I would also invite you to show where AIG payed out those contracts.

[Skwmom]

47. I read about Sachs and their contracts with AIG in Time.

And there have been multiple posts about AIG paying out on these wacky insurance contracts.

The referenced article (in the original post) mentions Goldman Sachs receiving money via AIG.

If this massive fraud is ever investigated, my money is on the AIG insurance contract scam being thought up after the fact to funnel money to Goldman Sachs and others to cover their losses. When something that dumb happens (the stupid contracts written by AIG), it begs the question, Was there a method to their madness?


Hmm.... maybe that's why Summers received so much money from Citigroup and the other crooks.

[Skwmom]

48. Here you go.

http://www.time.com/time/business/article/0,8599,1886275-2,00.html

But some rivals point to the fact that Goldman had uncharacteristically piled into contracts with a single counterparty. "I am shocked that Goldman had this much exposure ," says an analyst at a competing bank. "This was a major failing, but they got bailed."

Among the biggest beneficiaries of the AIG pass-through, at $12.9 billion, was Goldman Sachs, the investment-banking house that has been the single largest supplier of financial talent to the government. Critics have been quick to note — and not favorably — the almost uncanny influence of former Goldman executives.

Hmmm... It's not really shocking if the scheme with AIG was hatched as a way to recoup their losses (aka raid the U.S. Treasury).

[ClarkUSA]

2. Four other banks have also paid back TARP funds w/ 5% interest, citing Team O's "new restrictions"

Link: http://www.nytimes.com/2009/04/01/business/01bank.html

[Occam Bandage]

3. I think that's pretty important. I'm surprised DU hasn't been talking about that,

especially given how often we've complained about Goldman Sachs and the bailouts in general.

[ClarkUSA]

4. I've posted about this, but facts don't deter the shit-stirrers a bit from their ihateobama agenda.

[Skwmom]

50. No. It's an "I detest the financial crooks using the U.S. Treasury as their piggy bank,

indebting future generations for years to come, leaving us unable to tackle the tough problems of today, and causing huge future cuts in entitlements, etc....

I'm just not distracted by the likable guy that sits in the Whitehouse or the noise from the right wing or others.

[Skwmom]

49. Hmmmm.... maybe it's because GS received billions via AIG

and they seem to want to keep that money. I guess they are expecting us to forget all about that?

[vaberella]

46. Were they psyching us out? Really?!

I thought the economy was seriously cratering and they needed the funds. Now one by one they're paying it back. What about the dodgy loans.

[PBS Poll-435]

5. But, but, but what about TARP III?

:P

Perhaps hitting the panic button was a bit premature.

[Occam Bandage]

6. GEITHNER IS JUST GIVING MONEY TO HIS GOLDMAN SACHS BUDDIES

[paulk]

13. you're are conflating two different things

the TARP money GS got, which happened during Bush, and the Geithner bank bailout plan, which hasn't happened yet.

[Occam Bandage]

14. The Geithner plan is going to be even more restrictive than the Bush plan was.

If the Bush plan restrictions (tacked on by Obama) are enough to induce Goldman Sachs to repay the TARP funds in full, then doesn't that suggest the screeching about the Geithner "giveaway" was a bit premature?

[Larkspur]

26. That screeching was necessary to get Geithner to do his job as regulator

He was suppose to be a regulator when he headed the NY Fed, but he allowed the credit default swaps to be unregulated during his term in the NY Fed.

[paulk]

28. oh, come on...

that's absurd.

Sure Geithner's plan is more "restrictive" than the no strings Bush plan. How could it not be? But to extrapolate from that to the success of the bailout is shoddy reasoning.

And stop using weasel words like "screeching". It's really disheartening to see these sorts of tactics used by Democrats to discredit other Democratic critics of the plan.

[bighart]

52. didn't congress pass the TARP plan?

[paulk]

54. ?

[Larkspur]

7. It's "smoke and mirrors" or Bush style accounting that manufactured recent bank profits

The problem with reported bank profits is that banks have enormous discretion over when they choose to recognise losses. Their discretion is even larger now that the Financial Accounting Standards Board has suspended mark-to-market accounting. This means that Wells Fargo and other banks have the ability to manipulate their financial reporting so that they can show profits whenever it is convenient. The losses will appear later. -- Dean Baker No End in Sight

Wow. Just wow. Floyd Norris, via Barry Ritholtz, tells us that Goldman’s good numbers have a lot to do with a magic trick: they made December disappear! It’s an “orphan” month! -- Paul Krugman Bush budgeting lives — at Goldman Sachs

[Occam Bandage]

8. So Goldman Sachs is returning its bailout funds even though it's not really profitable?

Isn't that even better?

[Larkspur]

10. I don't believe that they will

They'll play a shell game with the public to intentionally deceive us.

Weren't these the same banks that hired Mark Penn's PR firm to help them improve public opinion about themselves?

[Occam Bandage]

11. I suppose you're entitled to your baseless speculation. nt

[Larkspur]

22. Have the banksters given us any reason to believe them?

These are the same crooks who whined about returning their bonuses they got for driving their companies into the ground.

FDR was right about these scumbags when he called them economic royalists who threaten our democracy for their comfort. Obama has yet to show me that he learned what FDR did about our current crop of economic royalists and he won't learn it as long as Summers and Geithern are incharge of his economic policy. Summers hates blue collar workers and loves the banksters and Geither his Summers lapdog.

[Alcibiades]

9. Will they repay the monies paid by AIG

Methinks those funds are a reason for their "return to profitability."

[Occam Bandage]

12. Eventually. Why not be glad they're repaying their ten billion dollars of the TARP funds?

[Alcibiades]

19. Absolutely!

Though they shouldn't have been given any of our money to begin with. Especially with the whole "we're giving money to firms that don't need it because we don't want any stigma to be attached to getting money" fig leaf.

I do hope this is an example to other FIRE sector firms who want something for nothing from the government. If conditionality is causing these firms to return to profitability and repay these handouts, then we should salute Geithner and the Obama administration for putting their feet to the fire, and demand more conditionality to return the money from the Paulson/Bernanke bailout to the public fisc. :patriot:

[Larkspur]

23. Show me the money!!!!

I'll believe that they will repay their TARP funds when I see it. Right now banks can deceive us on their books by reporting profits at their convenience and reporting losses later. They are creating a new bubble by doing this.

[Skwmom]

44. Shhh. You're not supposed to notice that.

The whole AIG scheme is so wacky, I can't help but wonder if Summers or one of the other idiots came up with the scheme to cover the losses of Goldman Sachs and others.

I read Goldman Sachs entered into a lot of contracts with AIG and that this was contrary to the prior practice of spreading the risk by entering into contracts with multiple parties. So why all of a sudden did they entered into these contracts with AIG and why did AIG even sell such crazy insurance contracts?

[CAcyclist]

15. But what about the 12.5 billion from AIG

what's the difference between those funds and the funds given directly? Nothing more than money laundering.

[uponit7771]

And they pumped their stock to do it...GS is a bunch of crooks IMHO.

....

[Occam Bandage]

16. So it's bad that Goldman Sachs is returning 10 billion

because they haven't yet returned a different 12 billion. Yes, that is well thought through.

[uponit7771]

17. No, it's bad that they're not doing it via profits but sell of their stock which they pumped

...by say it's a Q1 report without adding in a months worth of loses.

Banks are recovering but the most crooked (C, JPM, GS) are still working against main street a little IMHO

[Occam Bandage]

18. So you would rather they keep the ten billion dollars of taxpayer money?

That's the angle?

[Larkspur]

24. No that's not the angle

Goldman Sachs is playing a con game against the American people. By not replacing the crooks in charge, you only allow them to keep playing their con games against the public.

Goldman Sachs is creating another confidence bubble by reporting their profits early and later reporting their losses.

[CAcyclist]

20. Convenient amnesia re mark to market rules

"Many analysts welcomed the news as the latest in a series of signs that the financial industry is stabilizing."

The only reason they can post a gain is because of relaxation of mark to market rules.

[PBS Poll-435]

21. There is just no pleasing the TARPies.

Seriously.

[depakid]

25. Until there's transparency and accountability in the process

it's not possible to make any sort of judgment as to what the deal is here. Color me skeptical.

As anyone who knows this firm's ties to this and previous administrations should be.

[Larkspur]

27. Agree with you.

[Zynx]

31. The terms of the TARP infusions are online, if you care to read them.

[LiberalFighter]

29. Will they be paying back interest too?

[ClarkUSA]

36. The four other banks who've repaid their TARP funds in full included 5% interest.

I would think that this interest payment applies to all TARP repayments. See reply #2 for link to NYT news source.

[Romulox]

30. But I thought there was to be ARMAGEDDON if GS and others weren't offered trillions

in taxpayer dollars.

If GS and others can decide to pay back these funds so quickly, weren't they misrepresenting the severity of the problem? :wtf:

[Zynx]

33. GS is the only one that appears to be in good enough shape to do this.

They also never really begged for the money the way a lot of the banks did. The reason why it was vital in the fall to infuse capital in the banks was that there was a bit of a run on those institutions. That level of panic does not exist anymore.

Even if all the banks can pay us back right now, what would be the loss in that? We would have gotten two dividend payments at an 8% annual rate on all of that money.

[Romulox]

38. Not according to the OP. He's mentioned that at least 5 others also have paid

(or want to pay) off the TARP obligations ahead of schedule.

"That level of panic does not exist anymore. "

Then shouldn't they all pay back the TARP funds right now, the panic having passed? :hi:

"Even if all the banks can pay us back right now, what would be the loss in that?"

Generally, paying off an installment loan contract early does not obviate the requirement to pay interest for the entire life of the loan. In other words, you're proposing a much sweeter deal than the banks would to a customer.

[Zynx]

41. There are insolvent banks that need the money.

However, we are not in the midst of a total system collapse like we were.

As to your other point, so what? We borrowed at 3% and lent at 8%. That's a net interest margin of 5%. Banks would kill to do that well.

[Romulox]

42. The justification for the TARP was not to save every insolvent bank,

but rather to stabilize the overall economy.

"As to your other point, so what? We borrowed at 3% and lent at 8%. That's a net interest margin of 5%. Banks would kill to do that well."

Then why is Citibank, which charges 28% interest to many of its customers, in such bad shape? :rofl:

[JerseygirlCT]

32. With interest? nt

[Zynx]

34. They made dividend payments, just like everyone else with TARP funds.

[ClarkUSA]

37. Yes. See replies #2 and #36.

[JerseygirlCT]

39. Thanks! nt

[Hawkowl]

35. Will they repay the Fed Reserve?

Being the cynic that I am, I see GS paying back the TARP funds, with their onerous restrictions, but keeping the mystery funds supplied by the Fed Reserve. In fact, they probably will draw MORE FUNDS from the Fed. An end run around oversight, congress, the president and democracy. Why borrow, when you can get it gratis?

[Skwmom]

51. Didn't you hear? The Fed Reserve has created its own set of rules.

To heck with its charter or any other laws or regulation.

Hmmm... I thought we were a country that believed in the rule of law. I guess that rule only applies to the peasants.

[Hawkowl]

53. The veil is about to be ripped away

I've known since about the age of 4 that laws were for the peasants only. The rich always have their own rules. What's shocking is that they are no longer even pretending! The Fed has always had its own rules but now the public is actually starting to take notice.

We are just a few months (weeks?) from the public getting really, really, pissed off. Pissed off in a way we haven't seen in generations. We are cursed to live in interesting times.

[BlooInBloo]

40. Don't fall for it....

http://www.eschatonblog.com/2009/04/lucys-football_14.html