Saturday, October 24, 2009

Goldman Sachs Takes Advantage of Taxpayers Underpinning Financial System

Goldman's big profits and megabonuses, came as the US federal budget deficit hit $1.4 trillion - the highest since 1945. However that doesn't seem to concern Lloyd Blankfein - who, in 2007, when the economy was melting down, as chairman of Goldman Sachs, was paid a bonus of $67.9 million, and whose bonus this year could top that number - spoke at a Fortune magazine breakfast a few weeks ago, and he said, re. accepting TARP funds:

“If I had known it was as pregnant with this kind of potential for backlash, then of course I would have really not have liked it.”
These huge payouts, almost 50% of Goldman's revenue, would not be possible without the billions of dollars from taxpayers that have propped up the financial system. In addition, as George Soros said, "Banks are actually getting hidden subsidies of enormous amounts because of their ability to borrow at effectively zero, and buy 10-year government bonds at 3.5 per cent. So those earnings are not the achievement of risk-takers. These are gifts, hidden gifts, from the Government, so I don't think those monies should be used to pay bonuses."

Oh, and speaking of getting paid for nothing, Goldman Sachs continues to get paid for swaps on redeemed bonds.
New Jersey taxpayers are sending almost $1 million a month to a partnership run by Goldman Sachs Group Inc. for protection against rising interest costs on bonds that the state redeemed more than a year ago.
How much longer should we allow these superbanks to feed off the American public?
As long as we allow the existence of financial institutions that are too big to fail, the banks will continue to suck the life out of each and every one of us.

There are people who want to change things, for instance, Paul Volcker, who wants to break up the giant banks, so why isn't President Obama listening to Paul Volcker?
"People say I'm old-fashioned and banks can no longer be separated from nonbank activity. That argument brought us to where we are today." -- Paul Volcker


Anonymous,  21:23  

GS was the lead manager responsible for the sale of 148 CDOs (collateralized debt obligations), amounting to $83 billion, 2002-2008, that were issued primarily by Cayman Island entities to avoid most elements of U.S. income tax laws and SEC registration. What was the bailout cost to the US taxpayers for investors to wmom Goldman, Sachs sold these CDOs? As a reward for selling the $83 billion in complex securities — including “toxic assets” due to subprime mortgage debt — the firm earned about 1.5% underwriting commissions (well beyond the fees investment bankers earned for issuing mortgage-backed securities, corporate debt and equities that were all subject to SEC registration and U.S. income tax laws). These underwring fees, 2002-2008, amounted to about $1 1/4 billion! As with about half of the $1.3 trillion in total CDOs sold 2002-2009 — according to analysis drawing on unpublished industry data made public by Gary Kopff, a securitization expert — the credit risk was associated with mortgage-backed securities, primarily involving subprime mortgages, as well as credit default swaps that were pegged ultimately to the credit risks of U.S. subprime mortgages.

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