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Health Care Bill Explained In 5 Minutes
December 22, 2009 10:25 am
Jack Rice, air america
Goldman Sachs' secret bets
December 26, 2009 7:05 pm
Responding to Goldman Sachs
December 26, 2009 8:07 pm
Janet Tavakoli,President, Tavakoli Structured Finance, Inc.
.....If Wall Street had not manufactured value-destroying securities and related credit derivatives, the money supply for bad loans would have been choked off years earlier. Instead, Wall Street was chiefly responsible for the "financial innovation" that did massive damage to the U.S. economy......
.......Goldman claims the portfolios were fully disclosed to its customers. Yet at the time of the AIG bailout, Goldman did not disclose the nature of its trades with AIG, and Goldman did not disclose these portfolios to the U.S. public. If it had, the public might have balked at the bailout.
The public is an unwilling majority owner in AIG, and public money was funneled directly to Goldman Sachs as a result of suspect activity. The circumstances of AIG's crisis were extraordinary and without precedent. I maintain that the public is owed reparations, and it would be fair to make all of AIG's counterparties buy back the CDOs at full price, and they can keep the discounted value themselves.
Some similar CDOs currently trade for less than a dime on the dollar in the secondary market. Goldman's trades amounted to more than $20 billion (albeit Goldman traded or originated $33 billion of AIG's $80 billion of this ilk). If Goldman wants to claim it was "only following orders" for customers, that is between Goldman and the hedge funds or other "customers" involved. Goldman can fight it out with them if it wants its money back.
Goldman's synthetic deals that are still on AIG's books can be settled at ten cents on the dollar. This is the value at which other bond insurers have settled similar deals. The excess money already paid to Goldman can used to pay down AIG's public debt.