Home › Forums › Financial Markets/Economics › Has Goldman fatally damaged their Franchise?
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April 21, 2010 at 9:18 AM #542436April 21, 2010 at 9:35 AM #541521
Allan from Fallbrook
Participant[quote=patb]
Pat: Actually, I’m quite familiar with clawback and referenced it in an earlier post on this very thread. Its doubtful you read that post, and its doubtful you read any of my other posts describing Goldman’s position in re AIG.BK didn’t have dick to do with any of this, especially given the fact that Goldman was IN POSSESSION of AIG’s cash and securities as collateral on the owed monies and whatever difference that existed was covered by CDS from other third parties.
They would have been paid EITHER WAY.
This tiresome discussion on BK is utterly pointless. There would have been no clawback, in that Goldman ALREADY HELD THE FUNDS.
I don’t know if you are being intentionally obtuse or you simply don’t understand how collateral works in the securities industry. They did NOT have have counterparty risk, so what is your point?[/quote]
i saw that post, after i had posted, but, while I will grant you do appear to understand the securities trade, i’d venture you don’t understand the bankruptcy trade.
Yes, Goldman was holding collateral, one could even argue that made Goldman a “Secured” creditor.
However even secured creditors still need to go to
court.a judge could easily determine that it wouldn’t be in the best interests of AIG to allow Goldman to seize that collateral.
look at all those people sitting in default, filing bankruptcy to delay foreclosure.
if a judge determined that something in the AIG contracts was “Unconscionable, inactionable or
a policy violation” they could easily toss the case.Goldman was defecating in their loafers and desperate until Paulsen saved their lunch.
if they weren’t they would never have joined TARP.[/quote]
Pat: Actually, I’ve worked on more than my share of BKs (for clients of the insurance brokerage where I worked). I’m familiar with 7 and 11 and DIP (Debtor-in-Possession), as well as how secured and unsecured creditors are defined.
The thrust of my discussion with SK centered on the differences in terminology between commercial and securities, especially when one discusses things like “insurance” and “collateral”.
A credit default swap is not the same thing as a term life policy from State Farm. It may behave somewhat similarly, in terms of its function (as SK correctly pointed out), but its contractual nature and triggering mechanisms are far different.
Same goes for collateral in the securities sense of the word. This isn’t a jointly held asset, or a depository account where both parties are signatories. Rather, the assets (such as they are) are held by the party clearing the trades (Goldman Sachs). The way the clearing contracts are executed prevents a clawback and this is an intentional function of that same contract.
April 21, 2010 at 9:35 AM #541631Participant[quote=patb]
Pat: Actually, I’m quite familiar with clawback and referenced it in an earlier post on this very thread. Its doubtful you read that post, and its doubtful you read any of my other posts describing Goldman’s position in re AIG.BK didn’t have dick to do with any of this, especially given the fact that Goldman was IN POSSESSION of AIG’s cash and securities as collateral on the owed monies and whatever difference that existed was covered by CDS from other third parties.
They would have been paid EITHER WAY.
This tiresome discussion on BK is utterly pointless. There would have been no clawback, in that Goldman ALREADY HELD THE FUNDS.
I don’t know if you are being intentionally obtuse or you simply don’t understand how collateral works in the securities industry. They did NOT have have counterparty risk, so what is your point?[/quote]
i saw that post, after i had posted, but, while I will grant you do appear to understand the securities trade, i’d venture you don’t understand the bankruptcy trade.
Yes, Goldman was holding collateral, one could even argue that made Goldman a “Secured” creditor.
However even secured creditors still need to go to
court.a judge could easily determine that it wouldn’t be in the best interests of AIG to allow Goldman to seize that collateral.
look at all those people sitting in default, filing bankruptcy to delay foreclosure.
if a judge determined that something in the AIG contracts was “Unconscionable, inactionable or
a policy violation” they could easily toss the case.Goldman was defecating in their loafers and desperate until Paulsen saved their lunch.
if they weren’t they would never have joined TARP.[/quote]
Pat: Actually, I’ve worked on more than my share of BKs (for clients of the insurance brokerage where I worked). I’m familiar with 7 and 11 and DIP (Debtor-in-Possession), as well as how secured and unsecured creditors are defined.
The thrust of my discussion with SK centered on the differences in terminology between commercial and securities, especially when one discusses things like “insurance” and “collateral”.
A credit default swap is not the same thing as a term life policy from State Farm. It may behave somewhat similarly, in terms of its function (as SK correctly pointed out), but its contractual nature and triggering mechanisms are far different.
Same goes for collateral in the securities sense of the word. This isn’t a jointly held asset, or a depository account where both parties are signatories. Rather, the assets (such as they are) are held by the party clearing the trades (Goldman Sachs). The way the clearing contracts are executed prevents a clawback and this is an intentional function of that same contract.
April 21, 2010 at 9:35 AM #542089Participant[quote=patb]
Pat: Actually, I’m quite familiar with clawback and referenced it in an earlier post on this very thread. Its doubtful you read that post, and its doubtful you read any of my other posts describing Goldman’s position in re AIG.BK didn’t have dick to do with any of this, especially given the fact that Goldman was IN POSSESSION of AIG’s cash and securities as collateral on the owed monies and whatever difference that existed was covered by CDS from other third parties.
They would have been paid EITHER WAY.
This tiresome discussion on BK is utterly pointless. There would have been no clawback, in that Goldman ALREADY HELD THE FUNDS.
I don’t know if you are being intentionally obtuse or you simply don’t understand how collateral works in the securities industry. They did NOT have have counterparty risk, so what is your point?[/quote]
i saw that post, after i had posted, but, while I will grant you do appear to understand the securities trade, i’d venture you don’t understand the bankruptcy trade.
Yes, Goldman was holding collateral, one could even argue that made Goldman a “Secured” creditor.
However even secured creditors still need to go to
court.a judge could easily determine that it wouldn’t be in the best interests of AIG to allow Goldman to seize that collateral.
look at all those people sitting in default, filing bankruptcy to delay foreclosure.
if a judge determined that something in the AIG contracts was “Unconscionable, inactionable or
a policy violation” they could easily toss the case.Goldman was defecating in their loafers and desperate until Paulsen saved their lunch.
if they weren’t they would never have joined TARP.[/quote]
Pat: Actually, I’ve worked on more than my share of BKs (for clients of the insurance brokerage where I worked). I’m familiar with 7 and 11 and DIP (Debtor-in-Possession), as well as how secured and unsecured creditors are defined.
The thrust of my discussion with SK centered on the differences in terminology between commercial and securities, especially when one discusses things like “insurance” and “collateral”.
A credit default swap is not the same thing as a term life policy from State Farm. It may behave somewhat similarly, in terms of its function (as SK correctly pointed out), but its contractual nature and triggering mechanisms are far different.
Same goes for collateral in the securities sense of the word. This isn’t a jointly held asset, or a depository account where both parties are signatories. Rather, the assets (such as they are) are held by the party clearing the trades (Goldman Sachs). The way the clearing contracts are executed prevents a clawback and this is an intentional function of that same contract.
April 21, 2010 at 9:35 AM #542178Participant[quote=patb]
Pat: Actually, I’m quite familiar with clawback and referenced it in an earlier post on this very thread. Its doubtful you read that post, and its doubtful you read any of my other posts describing Goldman’s position in re AIG.BK didn’t have dick to do with any of this, especially given the fact that Goldman was IN POSSESSION of AIG’s cash and securities as collateral on the owed monies and whatever difference that existed was covered by CDS from other third parties.
They would have been paid EITHER WAY.
This tiresome discussion on BK is utterly pointless. There would have been no clawback, in that Goldman ALREADY HELD THE FUNDS.
I don’t know if you are being intentionally obtuse or you simply don’t understand how collateral works in the securities industry. They did NOT have have counterparty risk, so what is your point?[/quote]
i saw that post, after i had posted, but, while I will grant you do appear to understand the securities trade, i’d venture you don’t understand the bankruptcy trade.
Yes, Goldman was holding collateral, one could even argue that made Goldman a “Secured” creditor.
However even secured creditors still need to go to
court.a judge could easily determine that it wouldn’t be in the best interests of AIG to allow Goldman to seize that collateral.
look at all those people sitting in default, filing bankruptcy to delay foreclosure.
if a judge determined that something in the AIG contracts was “Unconscionable, inactionable or
a policy violation” they could easily toss the case.Goldman was defecating in their loafers and desperate until Paulsen saved their lunch.
if they weren’t they would never have joined TARP.[/quote]
Pat: Actually, I’ve worked on more than my share of BKs (for clients of the insurance brokerage where I worked). I’m familiar with 7 and 11 and DIP (Debtor-in-Possession), as well as how secured and unsecured creditors are defined.
The thrust of my discussion with SK centered on the differences in terminology between commercial and securities, especially when one discusses things like “insurance” and “collateral”.
A credit default swap is not the same thing as a term life policy from State Farm. It may behave somewhat similarly, in terms of its function (as SK correctly pointed out), but its contractual nature and triggering mechanisms are far different.
Same goes for collateral in the securities sense of the word. This isn’t a jointly held asset, or a depository account where both parties are signatories. Rather, the assets (such as they are) are held by the party clearing the trades (Goldman Sachs). The way the clearing contracts are executed prevents a clawback and this is an intentional function of that same contract.
April 21, 2010 at 9:35 AM #542451Participant[quote=patb]
Pat: Actually, I’m quite familiar with clawback and referenced it in an earlier post on this very thread. Its doubtful you read that post, and its doubtful you read any of my other posts describing Goldman’s position in re AIG.BK didn’t have dick to do with any of this, especially given the fact that Goldman was IN POSSESSION of AIG’s cash and securities as collateral on the owed monies and whatever difference that existed was covered by CDS from other third parties.
They would have been paid EITHER WAY.
This tiresome discussion on BK is utterly pointless. There would have been no clawback, in that Goldman ALREADY HELD THE FUNDS.
I don’t know if you are being intentionally obtuse or you simply don’t understand how collateral works in the securities industry. They did NOT have have counterparty risk, so what is your point?[/quote]
i saw that post, after i had posted, but, while I will grant you do appear to understand the securities trade, i’d venture you don’t understand the bankruptcy trade.
Yes, Goldman was holding collateral, one could even argue that made Goldman a “Secured” creditor.
However even secured creditors still need to go to
court.a judge could easily determine that it wouldn’t be in the best interests of AIG to allow Goldman to seize that collateral.
look at all those people sitting in default, filing bankruptcy to delay foreclosure.
if a judge determined that something in the AIG contracts was “Unconscionable, inactionable or
a policy violation” they could easily toss the case.Goldman was defecating in their loafers and desperate until Paulsen saved their lunch.
if they weren’t they would never have joined TARP.[/quote]
Pat: Actually, I’ve worked on more than my share of BKs (for clients of the insurance brokerage where I worked). I’m familiar with 7 and 11 and DIP (Debtor-in-Possession), as well as how secured and unsecured creditors are defined.
The thrust of my discussion with SK centered on the differences in terminology between commercial and securities, especially when one discusses things like “insurance” and “collateral”.
A credit default swap is not the same thing as a term life policy from State Farm. It may behave somewhat similarly, in terms of its function (as SK correctly pointed out), but its contractual nature and triggering mechanisms are far different.
Same goes for collateral in the securities sense of the word. This isn’t a jointly held asset, or a depository account where both parties are signatories. Rather, the assets (such as they are) are held by the party clearing the trades (Goldman Sachs). The way the clearing contracts are executed prevents a clawback and this is an intentional function of that same contract.
April 21, 2010 at 9:37 AM #541511scaredyclassic
Participanti know a tiny bit about bankruptcy and wouldn’t venture an opinion at all, but it sounds a little cocksure to say no risk at all to GS, even if they’re holding the monies. It’s not money in the bank in the sense that I have a gold coin in my pocket which has no leverage or connection or debt owed to anyone int he universe. Possession is 9/10 of the law (whatever that means), but once the courts get involved, who the heck knows…there’s still that other 1/10.
More important though, GS seems to be acting like a bunch of blowhard morons, liek theyr’e above it all and this is retarded. It seems liek the kind fo hubris one exhibits before getting the crap knocked out of one. People liek to talk about hwo dumb the govt is, but the lawyers at the SEC on this case? It’s a career-maker. What a wonderful thing to crush the lviing hell out of GS in the public spotlight. couldnt GS be a little bit less of an a**hole in their statements? is it really necessary to be so arrogant and to goad the publci to want blood?
April 21, 2010 at 9:37 AM #541621Participanti know a tiny bit about bankruptcy and wouldn’t venture an opinion at all, but it sounds a little cocksure to say no risk at all to GS, even if they’re holding the monies. It’s not money in the bank in the sense that I have a gold coin in my pocket which has no leverage or connection or debt owed to anyone int he universe. Possession is 9/10 of the law (whatever that means), but once the courts get involved, who the heck knows…there’s still that other 1/10.
More important though, GS seems to be acting like a bunch of blowhard morons, liek theyr’e above it all and this is retarded. It seems liek the kind fo hubris one exhibits before getting the crap knocked out of one. People liek to talk about hwo dumb the govt is, but the lawyers at the SEC on this case? It’s a career-maker. What a wonderful thing to crush the lviing hell out of GS in the public spotlight. couldnt GS be a little bit less of an a**hole in their statements? is it really necessary to be so arrogant and to goad the publci to want blood?
April 21, 2010 at 9:37 AM #542079Participanti know a tiny bit about bankruptcy and wouldn’t venture an opinion at all, but it sounds a little cocksure to say no risk at all to GS, even if they’re holding the monies. It’s not money in the bank in the sense that I have a gold coin in my pocket which has no leverage or connection or debt owed to anyone int he universe. Possession is 9/10 of the law (whatever that means), but once the courts get involved, who the heck knows…there’s still that other 1/10.
More important though, GS seems to be acting like a bunch of blowhard morons, liek theyr’e above it all and this is retarded. It seems liek the kind fo hubris one exhibits before getting the crap knocked out of one. People liek to talk about hwo dumb the govt is, but the lawyers at the SEC on this case? It’s a career-maker. What a wonderful thing to crush the lviing hell out of GS in the public spotlight. couldnt GS be a little bit less of an a**hole in their statements? is it really necessary to be so arrogant and to goad the publci to want blood?
April 21, 2010 at 9:37 AM #542168Participanti know a tiny bit about bankruptcy and wouldn’t venture an opinion at all, but it sounds a little cocksure to say no risk at all to GS, even if they’re holding the monies. It’s not money in the bank in the sense that I have a gold coin in my pocket which has no leverage or connection or debt owed to anyone int he universe. Possession is 9/10 of the law (whatever that means), but once the courts get involved, who the heck knows…there’s still that other 1/10.
More important though, GS seems to be acting like a bunch of blowhard morons, liek theyr’e above it all and this is retarded. It seems liek the kind fo hubris one exhibits before getting the crap knocked out of one. People liek to talk about hwo dumb the govt is, but the lawyers at the SEC on this case? It’s a career-maker. What a wonderful thing to crush the lviing hell out of GS in the public spotlight. couldnt GS be a little bit less of an a**hole in their statements? is it really necessary to be so arrogant and to goad the publci to want blood?
April 21, 2010 at 9:37 AM #542441Participanti know a tiny bit about bankruptcy and wouldn’t venture an opinion at all, but it sounds a little cocksure to say no risk at all to GS, even if they’re holding the monies. It’s not money in the bank in the sense that I have a gold coin in my pocket which has no leverage or connection or debt owed to anyone int he universe. Possession is 9/10 of the law (whatever that means), but once the courts get involved, who the heck knows…there’s still that other 1/10.
More important though, GS seems to be acting like a bunch of blowhard morons, liek theyr’e above it all and this is retarded. It seems liek the kind fo hubris one exhibits before getting the crap knocked out of one. People liek to talk about hwo dumb the govt is, but the lawyers at the SEC on this case? It’s a career-maker. What a wonderful thing to crush the lviing hell out of GS in the public spotlight. couldnt GS be a little bit less of an a**hole in their statements? is it really necessary to be so arrogant and to goad the publci to want blood?
April 21, 2010 at 9:45 AM #541530Participant[quote=IForget][quote=Allan from Fallbrook]
To argue that they were the recipient of a “bailout” or some back-room largesse on the part of the Fed is simply unsupported by the facts.
[/quote]Wrong! Government Sachs clearly benefited from information from the government which wasn’t available to non-insiders:
IForget: Read what I wrote. Then read your response.
I never claimed that they weren’t in possession of inside information. I’d be surprised if they weren’t, especially given the Goldman connections to the NY Fed and the Treasury Dept.
However, at no point did I ever claim that they weren’t in possession of inside information. In point of fact, I never even brought that up.
The word “largesse” as I used it refers to money, not information.
Robust and well-thought out argument otherwise, though. Just link to an outside article and call it a day. Well played, sir.
April 21, 2010 at 9:45 AM #541641Participant[quote=IForget][quote=Allan from Fallbrook]
To argue that they were the recipient of a “bailout” or some back-room largesse on the part of the Fed is simply unsupported by the facts.
[/quote]Wrong! Government Sachs clearly benefited from information from the government which wasn’t available to non-insiders:
IForget: Read what I wrote. Then read your response.
I never claimed that they weren’t in possession of inside information. I’d be surprised if they weren’t, especially given the Goldman connections to the NY Fed and the Treasury Dept.
However, at no point did I ever claim that they weren’t in possession of inside information. In point of fact, I never even brought that up.
The word “largesse” as I used it refers to money, not information.
Robust and well-thought out argument otherwise, though. Just link to an outside article and call it a day. Well played, sir.
April 21, 2010 at 9:45 AM #542099Participant[quote=IForget][quote=Allan from Fallbrook]
To argue that they were the recipient of a “bailout” or some back-room largesse on the part of the Fed is simply unsupported by the facts.
[/quote]Wrong! Government Sachs clearly benefited from information from the government which wasn’t available to non-insiders:
IForget: Read what I wrote. Then read your response.
I never claimed that they weren’t in possession of inside information. I’d be surprised if they weren’t, especially given the Goldman connections to the NY Fed and the Treasury Dept.
However, at no point did I ever claim that they weren’t in possession of inside information. In point of fact, I never even brought that up.
The word “largesse” as I used it refers to money, not information.
Robust and well-thought out argument otherwise, though. Just link to an outside article and call it a day. Well played, sir.
April 21, 2010 at 9:45 AM #542188Participant[quote=IForget][quote=Allan from Fallbrook]
To argue that they were the recipient of a “bailout” or some back-room largesse on the part of the Fed is simply unsupported by the facts.
[/quote]Wrong! Government Sachs clearly benefited from information from the government which wasn’t available to non-insiders:
IForget: Read what I wrote. Then read your response.
I never claimed that they weren’t in possession of inside information. I’d be surprised if they weren’t, especially given the Goldman connections to the NY Fed and the Treasury Dept.
However, at no point did I ever claim that they weren’t in possession of inside information. In point of fact, I never even brought that up.
The word “largesse” as I used it refers to money, not information.
Robust and well-thought out argument otherwise, though. Just link to an outside article and call it a day. Well played, sir.
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