Repeat after me. Goldman, Paulson, Geithner, Banksters. Birds of a feather flock together. I would like to know how Goldman might have used the TARP money to make any further hedged bets against banks common stock.
On 17-March Thurgy writes on the topic of Goldman Sachs:
This was a headline several weeks ago out of Bank of America. Apparently the secret to success in business is to just charge higher fees. Right. The secret is the backroom gaming of the system in which Goldman is the house.
It goes all the way back before AIG received its first "loan". The weekend meeting between AIG, Treasury and Goldman Sachs. It was known at the time Goldman had approximately $20B exposure to AIG. We also know that Goldman received $10 billion in TARP funds, which it says it would like to return. Goldman has also admitted to having a hedged position against the AIG exposure. My guess? They were shorting AIG common and every other instrument to cover a good portion of the exposure in case they were not made whole. In the end they were made whole by the taxpayer giving Goldman $18b by way of AIG I'm guessing Goldman also scored on the hedged side of this position as well. No need to keep the TARP money now.
There is a rumor about Goldman Sachs flying around on the street - allegedly they are about to report their second-best quarter in history, +$12 billion or so.
Gee, you don't think being paid by the taxpayer through AIG's "conduit" for losses that didn't (yet) happen at 100 cents on the dollar might have anything to do with that, do you?
And further (and potentially much worse) there is the repeated statement by Goldman executives that they were "fully hedged" against a potential counterparty default by AIG.
One wonders - was that "hedge" to be short the equity on AIG itself, perhaps?
Why is this important?
Because if that's how Goldman hedged they got paid twice and the taxpayer literally got robbed.
Someone in Congress needs to look into this now; there are already rumblings of investigation. Those rumblings need to get a lot louder and turn into subpoenas, not "polite inquiries."
If in fact Goldman (or anyone else) was "hedged" against a possible credit loss from their CDS with AIG and they were able to collect on that hedge (no matter what it was) those payments through AIG need to be clawed back immediately as nobody is entitled to be paid twice for the same risk and reap what amounts to a windfall profit by quite literally engineering a multi-billion dollar transfer of funds from the Taxpayer to the firm!
This is not small potatoes either - we're talking $100 billion+ in aggregate with these various banks on a worldwide basis.
