Has Goldman fatally damaged their Franchise?

[SK in CV]

[quote=Allan from Fallbrook][quote=SK in CV]
Speaking of the AIG counterparty payment, what’s your take on that? Nearly all of my information on that comes from former brokers, so I might be somewhat biased, but I don’t see any major problems with Goldman having received that payment (in that it was collateral they already held, so they were getting the money one way or the other).

[/quote]

The problem that I had with it is that it was basically a gift to GS. AIG owed GS (and others) tons of money because of their derivative liabilities. I remember providing some defense for the bailout, as to the need for injecting liquidity into the market. All the connections between the fed and the SEC and Treasury (those designing the bailout) and GS were pretty well known and bothersome. (If you haven’t read Matt Taibbi’s piece in Rolling Stone about GS, you should.) But it didn’t appear that Goldman Sachs would have their hands out. What I didn’t know, but I suspect all those creating TARP did know, is that GS would be by far the biggest beneficiary by way of those derivatives.

I don’t think that GS would have got all the money otherwise. AIG would have gone bankrupt. They would have been in line like other creditors. (the collateral, if indeed those derivatives are secured, which I’m not sure they are, would have been severely impaired.) It would have been full employment for BK attorneys for a decade. I have an attorney friend that does that kind of work for one of the giant law firms, and you better believe when there was talk of AIG going down, his erection lasted much longer than 4 hours.

So while they may have been legally entitled to the payments (the current charges against them notwithstanding), I’m not sure the payments they collected were really the intent of the bailouts. At least not superficially. I have little doubt those designing the bailout plans knew exactly where the money would go. Not exactly where I wanted my tax dollars going under the circumstances.

[UCGal]

[quote=Allan from Fallbrook][quote=briansd1][quote=Allan from Fallbrook]This latest Dodd legislation is also thin soup and we’re being told that it will fundamentally “change” these behaviors. What hooey.[/quote]

Would you rather have thin soup or go hungry?[/quote]

Brian: So, would I rather have a half-assed set of rules, or no rules at all? Don’t I get a third choice? Don’t we deserve a third (better) choice?

Not to be a smart-ass, but it has dawned on the Democrats that they control both houses of Congress and the presidency, right? They’re supposed to be the “party of the people” and protect us from the predations of these greedy Wall Streeters, right? Why do I have to choose thin soup or no soup, when what I want is a robust, hearty Beef and Barley soup? Why can’t Obama go all “Chunky” on their asses?[/quote]

Allan – you seem to have a good feel for all of this given your former worklife… What do you think of Blanche Lincoln’s proposal to put all CDOs and CDSs and other derivitives on public exchanges – so the parties would be in the open. It doesn’t prevent bad acts – but it makes the bad acts public.

I’m not a fan of Sen. Lincoln, but I like what I’ve heard of this proposal. And since she’s chair of the Senate Agricultural committee, she has say on this portion of the bill.

[UCGal]

[quote=Allan from Fallbrook][quote=briansd1][quote=Allan from Fallbrook]This latest Dodd legislation is also thin soup and we’re being told that it will fundamentally “change” these behaviors. What hooey.[/quote]

Would you rather have thin soup or go hungry?[/quote]

Brian: So, would I rather have a half-assed set of rules, or no rules at all? Don’t I get a third choice? Don’t we deserve a third (better) choice?

Not to be a smart-ass, but it has dawned on the Democrats that they control both houses of Congress and the presidency, right? They’re supposed to be the “party of the people” and protect us from the predations of these greedy Wall Streeters, right? Why do I have to choose thin soup or no soup, when what I want is a robust, hearty Beef and Barley soup? Why can’t Obama go all “Chunky” on their asses?[/quote]

Allan – you seem to have a good feel for all of this given your former worklife… What do you think of Blanche Lincoln’s proposal to put all CDOs and CDSs and other derivitives on public exchanges – so the parties would be in the open. It doesn’t prevent bad acts – but it makes the bad acts public.

I’m not a fan of Sen. Lincoln, but I like what I’ve heard of this proposal. And since she’s chair of the Senate Agricultural committee, she has say on this portion of the bill.

[UCGal]

[quote=Allan from Fallbrook][quote=briansd1][quote=Allan from Fallbrook]This latest Dodd legislation is also thin soup and we’re being told that it will fundamentally “change” these behaviors. What hooey.[/quote]

Would you rather have thin soup or go hungry?[/quote]

Brian: So, would I rather have a half-assed set of rules, or no rules at all? Don’t I get a third choice? Don’t we deserve a third (better) choice?

Not to be a smart-ass, but it has dawned on the Democrats that they control both houses of Congress and the presidency, right? They’re supposed to be the “party of the people” and protect us from the predations of these greedy Wall Streeters, right? Why do I have to choose thin soup or no soup, when what I want is a robust, hearty Beef and Barley soup? Why can’t Obama go all “Chunky” on their asses?[/quote]

Allan – you seem to have a good feel for all of this given your former worklife… What do you think of Blanche Lincoln’s proposal to put all CDOs and CDSs and other derivitives on public exchanges – so the parties would be in the open. It doesn’t prevent bad acts – but it makes the bad acts public.

I’m not a fan of Sen. Lincoln, but I like what I’ve heard of this proposal. And since she’s chair of the Senate Agricultural committee, she has say on this portion of the bill.

[UCGal]

[quote=Allan from Fallbrook][quote=briansd1][quote=Allan from Fallbrook]This latest Dodd legislation is also thin soup and we’re being told that it will fundamentally “change” these behaviors. What hooey.[/quote]

Would you rather have thin soup or go hungry?[/quote]

Brian: So, would I rather have a half-assed set of rules, or no rules at all? Don’t I get a third choice? Don’t we deserve a third (better) choice?

Not to be a smart-ass, but it has dawned on the Democrats that they control both houses of Congress and the presidency, right? They’re supposed to be the “party of the people” and protect us from the predations of these greedy Wall Streeters, right? Why do I have to choose thin soup or no soup, when what I want is a robust, hearty Beef and Barley soup? Why can’t Obama go all “Chunky” on their asses?[/quote]

Allan – you seem to have a good feel for all of this given your former worklife… What do you think of Blanche Lincoln’s proposal to put all CDOs and CDSs and other derivitives on public exchanges – so the parties would be in the open. It doesn’t prevent bad acts – but it makes the bad acts public.

I’m not a fan of Sen. Lincoln, but I like what I’ve heard of this proposal. And since she’s chair of the Senate Agricultural committee, she has say on this portion of the bill.

[UCGal]

[quote=Allan from Fallbrook][quote=briansd1][quote=Allan from Fallbrook]This latest Dodd legislation is also thin soup and we’re being told that it will fundamentally “change” these behaviors. What hooey.[/quote]

Would you rather have thin soup or go hungry?[/quote]

Brian: So, would I rather have a half-assed set of rules, or no rules at all? Don’t I get a third choice? Don’t we deserve a third (better) choice?

Not to be a smart-ass, but it has dawned on the Democrats that they control both houses of Congress and the presidency, right? They’re supposed to be the “party of the people” and protect us from the predations of these greedy Wall Streeters, right? Why do I have to choose thin soup or no soup, when what I want is a robust, hearty Beef and Barley soup? Why can’t Obama go all “Chunky” on their asses?[/quote]

Allan – you seem to have a good feel for all of this given your former worklife… What do you think of Blanche Lincoln’s proposal to put all CDOs and CDSs and other derivitives on public exchanges – so the parties would be in the open. It doesn’t prevent bad acts – but it makes the bad acts public.

I’m not a fan of Sen. Lincoln, but I like what I’ve heard of this proposal. And since she’s chair of the Senate Agricultural committee, she has say on this portion of the bill.

[Coronita]

[quote=Allan from Fallbrook][quote=briansd1][quote=Allan from Fallbrook]This latest Dodd legislation is also thin soup and we’re being told that it will fundamentally “change” these behaviors. What hooey.[/quote]

Would you rather have thin soup or go hungry?[/quote]

Brian: So, would I rather have a half-assed set of rules, or no rules at all? Don’t I get a third choice? Don’t we deserve a third (better) choice?

Not to be a smart-ass, but it has dawned on the Democrats that they control both houses of Congress and the presidency, right? They’re supposed to be the “party of the people” and protect us from the predations of these greedy Wall Streeters, right? Why do I have to choose thin soup or no soup, when what I want is a robust, hearty Beef and Barley soup? Why can’t Obama go all “Chunky” on their asses?[/quote]

Different political parties, same masters.

[Coronita]

[quote=Allan from Fallbrook][quote=briansd1][quote=Allan from Fallbrook]This latest Dodd legislation is also thin soup and we’re being told that it will fundamentally “change” these behaviors. What hooey.[/quote]

Would you rather have thin soup or go hungry?[/quote]

Brian: So, would I rather have a half-assed set of rules, or no rules at all? Don’t I get a third choice? Don’t we deserve a third (better) choice?

Not to be a smart-ass, but it has dawned on the Democrats that they control both houses of Congress and the presidency, right? They’re supposed to be the “party of the people” and protect us from the predations of these greedy Wall Streeters, right? Why do I have to choose thin soup or no soup, when what I want is a robust, hearty Beef and Barley soup? Why can’t Obama go all “Chunky” on their asses?[/quote]

Different political parties, same masters.

[Coronita]

[quote=Allan from Fallbrook][quote=briansd1][quote=Allan from Fallbrook]This latest Dodd legislation is also thin soup and we’re being told that it will fundamentally “change” these behaviors. What hooey.[/quote]

Would you rather have thin soup or go hungry?[/quote]

Brian: So, would I rather have a half-assed set of rules, or no rules at all? Don’t I get a third choice? Don’t we deserve a third (better) choice?

Not to be a smart-ass, but it has dawned on the Democrats that they control both houses of Congress and the presidency, right? They’re supposed to be the “party of the people” and protect us from the predations of these greedy Wall Streeters, right? Why do I have to choose thin soup or no soup, when what I want is a robust, hearty Beef and Barley soup? Why can’t Obama go all “Chunky” on their asses?[/quote]

Different political parties, same masters.

[Coronita]

[quote=Allan from Fallbrook][quote=briansd1][quote=Allan from Fallbrook]This latest Dodd legislation is also thin soup and we’re being told that it will fundamentally “change” these behaviors. What hooey.[/quote]

Would you rather have thin soup or go hungry?[/quote]

Brian: So, would I rather have a half-assed set of rules, or no rules at all? Don’t I get a third choice? Don’t we deserve a third (better) choice?

Not to be a smart-ass, but it has dawned on the Democrats that they control both houses of Congress and the presidency, right? They’re supposed to be the “party of the people” and protect us from the predations of these greedy Wall Streeters, right? Why do I have to choose thin soup or no soup, when what I want is a robust, hearty Beef and Barley soup? Why can’t Obama go all “Chunky” on their asses?[/quote]

Different political parties, same masters.

[Coronita]

[quote=Allan from Fallbrook][quote=briansd1][quote=Allan from Fallbrook]This latest Dodd legislation is also thin soup and we’re being told that it will fundamentally “change” these behaviors. What hooey.[/quote]

Would you rather have thin soup or go hungry?[/quote]

Brian: So, would I rather have a half-assed set of rules, or no rules at all? Don’t I get a third choice? Don’t we deserve a third (better) choice?

Not to be a smart-ass, but it has dawned on the Democrats that they control both houses of Congress and the presidency, right? They’re supposed to be the “party of the people” and protect us from the predations of these greedy Wall Streeters, right? Why do I have to choose thin soup or no soup, when what I want is a robust, hearty Beef and Barley soup? Why can’t Obama go all “Chunky” on their asses?[/quote]

Different political parties, same masters.

[Allan from Fallbrook]

SK: Except, in this instance, that is not how collateral works. In this instance, Goldman was well within their rights to step in and seize the collateral and not have to wait in line. The point is somewhat nuanced, but we’re not dealing with “secured” and “collateral” in the commercially accepted sense of the words. Again, while I’m not a fan of Goldman, I understand how this particular counterparty arrangement works and they would have been (legally) able to step and assert their ownership, regardless of where AIG was on the BK continuum.

UCGal: I haven’t read Lincoln’s proposition, but I’m generally supportive of more and better regulation of derivative products, including CDOs, CDSs, CMOs and all the rest of these very arcane financial instruments.

I have a solid background in corporate finance and accounting and understanding the ins and outs of many of these products is extremely difficult even with my background.

I don’t know if you followed the AIG debacle at all, but the government agency responsible for keeping an eye on AIG was OTS (Office of Thrift Supervision). To say that this agency was a really, REALLY poor choice is to understate it magnificently. Moreoever, during Congressional hearings on AIG, the government itself was unsure as to what agency had oversight and enforcement responsbilities (see NPR article on same: http://www.npr.org/templates/story/story.php?storyId=104979546).

Speaking of derivatives and understanding them: If you have some time and feel like overtaxing your brain cells, read “Traders, Guns and Money” by Das. This is one of the best books on derivatives out there and by a master of the products.

[Allan from Fallbrook]

SK: Except, in this instance, that is not how collateral works. In this instance, Goldman was well within their rights to step in and seize the collateral and not have to wait in line. The point is somewhat nuanced, but we’re not dealing with “secured” and “collateral” in the commercially accepted sense of the words. Again, while I’m not a fan of Goldman, I understand how this particular counterparty arrangement works and they would have been (legally) able to step and assert their ownership, regardless of where AIG was on the BK continuum.

UCGal: I haven’t read Lincoln’s proposition, but I’m generally supportive of more and better regulation of derivative products, including CDOs, CDSs, CMOs and all the rest of these very arcane financial instruments.

I have a solid background in corporate finance and accounting and understanding the ins and outs of many of these products is extremely difficult even with my background.

I don’t know if you followed the AIG debacle at all, but the government agency responsible for keeping an eye on AIG was OTS (Office of Thrift Supervision). To say that this agency was a really, REALLY poor choice is to understate it magnificently. Moreoever, during Congressional hearings on AIG, the government itself was unsure as to what agency had oversight and enforcement responsbilities (see NPR article on same: http://www.npr.org/templates/story/story.php?storyId=104979546).

Speaking of derivatives and understanding them: If you have some time and feel like overtaxing your brain cells, read “Traders, Guns and Money” by Das. This is one of the best books on derivatives out there and by a master of the products.

[Allan from Fallbrook]

SK: Except, in this instance, that is not how collateral works. In this instance, Goldman was well within their rights to step in and seize the collateral and not have to wait in line. The point is somewhat nuanced, but we’re not dealing with “secured” and “collateral” in the commercially accepted sense of the words. Again, while I’m not a fan of Goldman, I understand how this particular counterparty arrangement works and they would have been (legally) able to step and assert their ownership, regardless of where AIG was on the BK continuum.

UCGal: I haven’t read Lincoln’s proposition, but I’m generally supportive of more and better regulation of derivative products, including CDOs, CDSs, CMOs and all the rest of these very arcane financial instruments.

I have a solid background in corporate finance and accounting and understanding the ins and outs of many of these products is extremely difficult even with my background.

I don’t know if you followed the AIG debacle at all, but the government agency responsible for keeping an eye on AIG was OTS (Office of Thrift Supervision). To say that this agency was a really, REALLY poor choice is to understate it magnificently. Moreoever, during Congressional hearings on AIG, the government itself was unsure as to what agency had oversight and enforcement responsbilities (see NPR article on same: http://www.npr.org/templates/story/story.php?storyId=104979546).

Speaking of derivatives and understanding them: If you have some time and feel like overtaxing your brain cells, read “Traders, Guns and Money” by Das. This is one of the best books on derivatives out there and by a master of the products.

[Allan from Fallbrook]

SK: Except, in this instance, that is not how collateral works. In this instance, Goldman was well within their rights to step in and seize the collateral and not have to wait in line. The point is somewhat nuanced, but we’re not dealing with “secured” and “collateral” in the commercially accepted sense of the words. Again, while I’m not a fan of Goldman, I understand how this particular counterparty arrangement works and they would have been (legally) able to step and assert their ownership, regardless of where AIG was on the BK continuum.

UCGal: I haven’t read Lincoln’s proposition, but I’m generally supportive of more and better regulation of derivative products, including CDOs, CDSs, CMOs and all the rest of these very arcane financial instruments.

I have a solid background in corporate finance and accounting and understanding the ins and outs of many of these products is extremely difficult even with my background.

I don’t know if you followed the AIG debacle at all, but the government agency responsible for keeping an eye on AIG was OTS (Office of Thrift Supervision). To say that this agency was a really, REALLY poor choice is to understate it magnificently. Moreoever, during Congressional hearings on AIG, the government itself was unsure as to what agency had oversight and enforcement responsbilities (see NPR article on same: http://www.npr.org/templates/story/story.php?storyId=104979546).

Speaking of derivatives and understanding them: If you have some time and feel like overtaxing your brain cells, read “Traders, Guns and Money” by Das. This is one of the best books on derivatives out there and by a master of the products.

[Author]

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