@tincup said:
If I recall, (but don't remember for sure without doing some more looking into it), even though Citigroup paid the FRBNY $50 million, it was to 'release' Citigroup from an agreement they had made, which saved them (Citigroup) a lot of money that they still owed. In other words, a 'sweetheart' deal, and some in the public were not too happy about that.
No, it was an administrative fee. The big $$$ were from the Citibank preferred and common shares.
Citibank got a total of $45 BB. The government made about $13 BB. Meanwhile, Citibank common stock for the shareholders is less than 1/10th the 2007 price.
Some "bailout" !!
Meanwhile, unions and S&L politicians are being bailed out with NO responsibility for their fiscal mismanagement in part because people are focused on non-existend Wall Street bailouts.
@jmski52 said:
Off the top of my head, it was Goldman Sachs who was indirectly bailed out in 2008 when a division of AIG was going belly-up and was bailed out so that Goldman could be made whole. Otherwise, they'd have been in serious financial trouble.
Uh, no they wouldn't. AIG had the assets to pay it off 100 cents on the dollar but not at that time because everything froze up. It was a $12 BB payment and GS would have gotten about $6-$8 BB.
Their equity capital was about $50 BB so a $4-$6 BB hit is just a scratch. Particularly after TARP $$$.;
People who think the Wall Street banks were in trouble simply can't read a balance sheet. I see these jokers all the time and they are just regurgitating slop they read on the Internet.
I owned GS bonds so I was watching GS balance sheet and stock price every few minutes (!) for DAYS. Trust me, if they had "serious finanacial trouble" my team and I would have dumped the bonds pronto (like with Lehman Brothers).
Meanwhile, unions and S&L politicians are being bailed out with NO responsibility for their fiscal mismanagement in part because people are focused on non-existend Wall Street bailouts.
this is because most Americans (who are also heavily in debt) do not understand the meaning of "fiscal management." Majority of the remaining Americans realize their choices in these politicians means little to nothing.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
The Fed is the most transparent institution we have. Exactly what don't you know about ?
How much gold and silver is actually in the vault would be a good starting point. A thorough and truly independent audit is needed.
FED meetings are in reality corporate board meetings. What comes out from behind the closed (non-transparent) door is simply what they and their counterparts in public office think we should believe. Being the financier of congress's unlimited need for stupid money protects them from actual and effective congressional oversight.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
People who think the Wall Street banks were in trouble simply can't read a balance sheet.
Lack of proper risk assessment (greed), while using other people's money, is what got them in trouble.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
I owned GS bonds so I was watching GS balance sheet and stock price every few minutes (!) for DAYS. Trust me, if they had "serious finanacial trouble" my team and I would have dumped the bonds pronto (like with Lehman Brothers).
Apparently, you don't know what you don't know, to wit:
FOR IMMEDIATE RELEASE
Thursday, September 20, 2018
Contact: Nick Jacobs, 202-618-6430 or njacobs@bettermarkets.com
Email shows Goldman admitted it was “toast” and only survived due to government bailouts
Washington, D.C. – On the tenth anniversary of Morgan Stanley and Goldman Sachs failing on Friday, September 20, 2008, Dennis Kelleher, President and CEO of Better Markets, issued the following statement:
“Goldman Sachs has relentlessly tried to rewrite the history of the 2008 crash, pretending that it was never at risk of failure. That is simply false. As proved by an email from ten years ago (reproduced below), Goldman Sachs was ‘toast’ and would have gone bankrupt but for being bailed out by the United States government and taxpayers. Those bailouts saved the bank and the jobs, status and wealth of all the Goldman bankers. For example, the astronomical wealth of CEO Lloyd Blankfein, former President Gary Cohn and all the other Goldman partners only exists today because they were bailed out. Just like the shareholders in bankrupt Lehman Brothers, their stock and options would have been worthless, including the recently reported $3 billion ‘Goldman partners’ haul on crisis-era options.
“We know this because, ten years ago today, just five days after Lehman Brothers filed for bankruptcy, four days after the $85 billion bailout of AIG, and days after Treasury Secretary Paulson effectively nationalized the $3.7 trillion money market industry via a guaranty program, Morgan Stanley called New York Fed President Tim Geithner to inform him that it would not be able to open its doors on Monday and Goldman admitted that, if that happened, it was ‘toast,’ as reflect in an internal Fed email (reproduced below).
“While many are remembering the 10th anniversary of the collapse of Lehman Brothers and the onset of the worse financial crash since 1929, there is too much spin, self-congratulation and omission or denial of the actual facts. As we have detailed, the crash had many causes, but a big one was the reckless and illegal activities of Wall Street’s too-big-to-fail firms, which were nonetheless bailed out without any accountability. On this 10th anniversary, it is important to remember that Goldman Sachs and the other too-big-to-fail financial firms only exist today due to the generosity and decisive role of the U.S. government and taxpayers in stopping the crisis and saving those Wall Street giants with trillions of dollars in bailouts. False narratives, forgetting or ignoring those facts and so many others may be comforting to those on Wall Street and their allies, but it blinds them to what is happening in the country and why.”
This email was from Michael Silva who was the chief of staff and senior vice president for the Executive Group at the New York Fed, and relates to a phone call from Morgan Stanley (MS) to Timothy F. Geithner (TFG), then President of the Federal Reserve Bank of New York, about it and Goldman Sachs (GS).
Q: Are You Printing Money? Bernanke: Not Literally
@psuman08 said:
I don't think this is possible in the global economy. I think what we need is to bring transparency to the FED.
The Fed is the most transparent institution we have. Exactly what don't you know about?
What is the data they are using? Powell all but admitted that the government data they have been using is not accurate (jobs numbers and the constant corrections). Are inflation numbers that are massaged to eliminate basic necessities what we should be using?
What is more important, employment or inflation? We have heard both. I am not saying this is not a difficult tap-dance, but what if we knew what the Fed's acceptable unemployment number is, modeling is easier. Economists that I have seen guess between 4 and 4.5% - and what job numbers are you using? The BS numbers that have been released all year and corrected by 900K at this point? Regarding inflation, they say 2% inflation is the goal, but we also know that is BS based on their recent rate cuts. Again, I realize this is tough when Yellen is stabbing you in the back with her policies. Maybe a little transparency that the Fed's hands are tied regarding inflation when the Treasury and government spending is working against them. If they are truly independent (lol) he could speak freely and be transparent
GF, I normally agree with your posts, but being the "most transparent institution" is like being the best looking in an ugly contest.
@jmski52 said:
This email was from Michael Silva who was the chief of staff and senior vice president for the Executive Group at the New York Fed, and relates to a phone call from Morgan Stanley (MS) to Timothy F. Geithner (TFG), then President of the Federal Reserve Bank of New York, about it and Goldman Sachs (GS).
Dennis Kelleher is a financial doofus. Goldman Sachs paid back the TARP $$$ within 9 months. I don't think a bank that was "toast" would have been able to pay back that loan WITHOUT diluting their shareholders as was done by Citibank. Kelleher can't read a balance sheet and is very quiet on how a $4 BB hit imperils a bank with $50 BB in equity capital.
But he sure remained quiet when the Teamsters Pension Plan, the UAW, and Detroit penisoners were bailed out with free money that will NEVER be paid back.
1 more thing: both Goldman and JP Morgan asked to NOT receive TARP $$$. Doesn't sound like they really needed the money, huh ? They were forced at gunpoint to take the TARP $$$ so as not to "stigmatize" other more needy TARP recipients.
@psuman08 said:
GF, I normally agree with your posts, but being the "most transparent institution" is like being the best looking in an ugly contest.
There's a difference between TRANSPARENCY and ACCURACY. You are correct that there are big changes in data, revisions, benchmark revisions, etc. But the Fed deals with the information that it has at that moment. In that respect, they do the best they can with the information they have AT THAT TIME.
Have you seen the press conferences like last week's after the FOMC meets to decide on Fed policy ? Jay Powell speaks about what the Fed is up to....and then....he takes Q&A for 45 minutes from the press who can ask him ANYTHING about the economy.
You think politicians do that with spending, entitlements, etc. ? No way.
It's ridiculous that the Fed -- which made the government about $500 BB in "profits" the last 10-12 years -- gets attacked by folks who have no better plan for a monetary system. The profit center gets attacked...the cost centers get a free pass.
It's ridiculous that the Fed -- which made the government about $500 BB in "profits" the last 10-12 years -- gets attacked by folks who have no better plan for a monetary system. The profit center gets attacked...the cost centers get a free pass.
We middle class folks attack the FED because they are enriching the top 10% at our expense. Their modern management of our economy is designed for this result and they have been 100% successful.
Defenders of our central bank are normally those that profit in some way at the expense of the innocent outsiders. The economy is not a "market," it is a specific money movement system that is forced on everyone. It should be designed and operated in a way that does not take from some to enrich others. Such enrichment should be limited to valid markets that are tightly regulated. I am a strong supporter of maximum employment and stable prices and the FED should be limited to this mandate. After all, theses are the limitations that allowed it to be forced on us by our elected leaders.
The price of gold is the true tool for measuring the FED's ability to do it's authorized job.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
" No, it was an administrative fee. The big $$$ were from the Citibank preferred and common shares. "
It can be called whatever..... it still released Citigroup from the agreement they had entered into and were bound by.. and the release was to their advantage (Citigroup).
A bailout is still a bailout. You had made a statement to the effect that the FED does NOT bail out banks. I think the examples given appear to disprove that assertion.
@tincup said:
" No, it was an administrative fee. The big $$$ were from the Citibank preferred and common shares. "
It can be called whatever..... it still released Citigroup from the agreement they had entered into and were bound >by.. and the release was to their advantage (Citigroup).
A bailout is still a bailout. You had made a statement to the effect that the FED does NOT bail out banks. I think the examples given appear to disprove that assertion.
Really ? So the shareholders were "bailed out" and are sitting with a 90% loss ? How come "bailouts" for politically connnected special interest groups don't include a 90% haircut ?
I'm sorry, but "bailout" to me means you got money you weren't entitled to. Since some banks didn't even WANT the TARP $$$ and others got diluted to hell, it seems asinine to me to say the banks got "bailed out." Since the Treasury made $$$ on the policy, no bailout took place.
Explain the advantage in having your shareholders diluted 90% ? Have you punched up a long-term chart of Citibank ? The release was NOT to Citibank's advantage, it was an administrative detail. You think Citibank was going to be part of the U.S. Treasury for years and decades ?
@tincup said:
" No, it was an administrative fee. The big $$$ were from the Citibank preferred and common shares. "
It can be called whatever..... it still released Citigroup from the agreement they had entered into and were bound >by.. and the release was to their advantage (Citigroup).
A bailout is still a bailout. You had made a statement to the effect that the FED does NOT bail out banks. I think the examples given appear to disprove that assertion.
Really ? So the shareholders were "bailed out" and are sitting with a 90% loss ? How come "bailouts" for politically connnected special interest groups don't include a 90% haircut ?
I'm sorry, but "bailout" to me means you got money you weren't entitled to. Since some banks didn't even WANT the TARP $$$ and others got diluted to hell, it seems asinine to me to say the banks got "bailed out." Since the Treasury made $$$ on the policy, no bailout took place.
Explain the advantage in having your shareholders diluted 90% ? Have you punched up a long-term chart of Citibank ? The release was NOT to Citibank's advantage, it was an administrative detail. You think Citibank was going to be part of the U.S. Treasury for years and decades ?
.
The intent of the bailout was not to help shareholders. Citibank made bad choices. They also engaged in unethical dealings. And they made a lot of money that they weren't really entitled to. Their shareholders deserved what they got (although bank management did not get what they deserved). The interconnected incestuous relationship between the FED and the banks could not allow the Citibank domino to fall. So Citibank was supported (yes, bailed out) to the extent necessary to keep it from toppling over into the next domino.
Those bailouts saved the bank and the jobs, status and wealth of all the Goldman bankers. For example, the astronomical wealth of CEO Lloyd Blankfein, former President Gary Cohn and all the other Goldman partners only exists today because they were bailed out. Just like the shareholders in bankrupt Lehman Brothers, their stock and options would have been worthless, including the recently reported $3 billion ‘Goldman partners’ haul on crisis-era options.
Q: Are You Printing Money? Bernanke: Not Literally
The initial 2008-09 bailouts may have enriched banks/bankers but it did save the banking industry and therefore the common folk who depend on it. Destruction of a national economy leads to destruction of the nation that hosts it. Problem lies in once FED/Treas. Dept. learned they could print endless amounts of money without blowing up the economy they continued to do so carelessly ever since then (various forms of QE) at the expense of higher inflation. Since this magic money tree (MMT) tool continues to be at their disposal they have become more careless in their oversight of the economy. They now have this escape hatch from their mismanagement.
True definition of economic inflation is an increase in the money supply. The result is higher price inflation.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
@derryb said:
The initial 2008-09 bailouts may have enriched banks/bankers but it did save the banking industry and therefore the common folk who depend on it.
@derryb said:
The initial 2008-09 bailouts may have enriched banks/bankers but it did save the banking industry and therefore the common folk who depend on it.
Yes, success and failure are to be shared.
Banks/bankers got bonuses while the common folk got higher prices. Sharing? LOL
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
@derryb said:
The initial 2008-09 bailouts may have enriched banks/bankers but it did save the banking industry and therefore the common folk who depend on it.
Yes, success and failure are to be shared.
Banks/bankers got bonuses while the common folk got higher prices. Sharing? LOL
There was some Muppet band with a song called "The Song Remains the Same" Expect MUCH MORE of the same. RGDS!
@derryb said:
The initial 2008-09 bailouts may have enriched banks/bankers but it did save the banking industry and therefore the common folk who depend on it. Destruction of a national economy leads to destruction of the nation that hosts it. Problem lies in once FED/Treas. Dept. learned they could print endless amounts of money without blowing up the economy they continued to do so carelessly ever since then (various forms of QE) at the expense of higher inflation. Since this magic money tree (MMT) tool continues to be at their disposal they have become more careless in their oversight of the economy. They now have this escape hatch from their mismanagement.
The problem is they've essentially removed the consequence of pain from bad decisions. If I thought I was immortal, I would live my life differently than I do today. But it's the threat of pain and death that keep me from making decisions with bad health implications. Once you've removed the ultimate penalty of bankruptcy, liquidation, and failure, banks and others are encouraged to act with reckless abandon. Is that preferable? Perhaps if the safety net wasn't there we wouldn't get into these predicaments or they wouldn't be as bad.
There was some Muppet band with a song called "The Song Remains the Same" Expect MUCH MORE of the same. RGDS!
And one with a song called "Won't Get Fooled Again."
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
@dcarr said:
The intent of the bailout was not to help shareholders. Citibank made bad choices. They also engaged in unethical dealings. And they made a lot of money that they weren't really entitled to. Their shareholders deserved what they got (although bank management did not get what they deserved). The interconnected incestuous relationship between the FED and the banks could not allow the Citibank domino to fall. So Citibank was supported (yes, bailed out) to the extent necessary to keep it from toppling over into the next domino.
But the bank wasn't in need of a "bailout." Banks run into temporary liquidity issues because of the nature of banking. It's the nature of fractional reserve banking.
They didn't engage in unethical dealings -- unless you mean making no-down and low-down mortgages to PC-groups mandated by HUD, Fannie, FHA, and Freddie. The government -- NOT the Fed -- wanted those mortgages made....the Fed (Greenspan) was lobbying to END the policy and the POLITICIANS and GSEs fought it tooth and nail. I know -- I hosted these lobbyists for my trade group.
Sorry, but being diluted 90% is not being "bailed out." It's in the governments best interests to support banks rather than have to create new ones...pawn the assets off on other banks.....or have the govt run them.
@jmski52 said:
Never forget.
Those bailouts saved the bank and the jobs, status and wealth of all the Goldman bankers. For example, the astronomical wealth of CEO Lloyd Blankfein, former President Gary Cohn and all the other Goldman partners only exists today because they were bailed out. Just like the shareholders in bankrupt Lehman Brothers, their stock and options would have been worthless, including the recently reported $3 billion ‘Goldman partners’ haul on crisis-era options.
You must have forgot.
The wealth of the Goldman partners was NEVER in doubt because the equity capital never dipped below $50 BB. I know -- I was tracking it minute-by-minute in September and October 2008.
Lehman Brothers CEO Dick Fuld lost $700,000,000 in stock, RSUs, and options. Your source clearly wasn't tracking the crisis, this was known by September 16th. Goldman and JP Morgan shares bottomed 3 trading days later; Citibank 5-6 days later.
All of the people you guys quote are financial liars and ignoramuses. They have nothing to say about REAL bailouts because those bailouts benefit their political interests (i.e., members of a certain political party, unions).
$2 trillion is unfunded in pensions/OPEBs for S&L govts. and not a peep from the same frauds who use ERISA to mandate companies fund corporate benefits (except when it leads to union layoffs, then forebearances are given).
The government MADE $$$ on TARP. The "bailout" made them money. But the "bailout" for certain politically-connected groups will NOT make the taxpayers $$$. $36,000,000,000 went down the tubes bailing out the Teamsters CSPF and nobody is talking about it because "Wall Street greed" is a better narrative -- if false -- than "union and political party slush fund" used to siphon off retiree benefits.
Wall Street is for The Rich. Unions are for The Little Guy. I know -- I heard it on CNN. And MSNBC. And ABC. And CBS. And ABC.
@ProofCollection said: @derryb said:
The initial 2008-09 bailouts may have enriched banks/bankers but it did save the banking industry and therefore the common folk who depend on it. Destruction of a national economy leads to destruction of the nation that hosts it. Problem lies in once FED/Treas. Dept. learned they could print endless amounts of money without blowing up the economy they continued to do so carelessly ever since then (various forms of QE) at the expense of higher inflation. Since this magic money tree (MMT) tool continues to be at their disposal they have become more careless in their oversight of the economy. They now have this escape hatch from their mismanagement.
Nonsense....when the government declared a Bank Holiday in 1933, did it "bail out" millions of American's deposits ? Maybe the average American should have gotten daily or weekly balance sheets on their banks sent by Western Union to make sure they put their money in safe banks ?
I'm assuming they didn't have internet or Bloomberg access in 1933 which would have made that moot !!
The problem is they've essentially removed the consequence of pain from bad decisions. If I thought I was immortal, I would live my life differently than I do today. But it's the threat of pain and death that keep me from making decisions with bad health implications. Once you've removed the ultimate penalty of bankruptcy, liquidation, and failure, banks and others are encouraged to act with reckless abandon. Is that preferable? Perhaps if the safety net wasn't there we wouldn't get into these predicaments or they wouldn't be as bad.
While I think tighter controls could be implemented to tie executive pay to stock price performance....and while I think CEO pay is partly disconnected to shareholder performance...to say that banks are immune from bad decisions is prepestorous. That's what the media elite -- mostly financial ignoramuses -- want you to think:
Citibank's stock price is still down 90% from 2007 because of dilution.
JPM and GS were forced to take TARP $$$ -- even though they didn't want the $$$ (no bailout needed) -- and suffered dilution (i.e., their share price and earnings fell 3-5% to account for the unnecessary preferred stock they issued at a high coupon to the Treasury TARP program). In other words....JPM and GS were BAILING OUT the U.S. Treasury. Didn't hear that from ABC or CNN ? I guess they don't employ any MBAs or CFAs.
Most of the banks that lost $$$ were small politically-connected banks.
Other TARP losers were the auto unions (bailed out for votes in Michigan).
Overall...the Treasury made $$$ on TARP because of Wall Street banks (big gains) offsetting special interest groups that escaped scrutiny (small banks, no-doc/low-doc lenders, auto companies, unions).
It's a lot easier to cry about "Wall Street bailouts" then tell the truth about REAL bailouts, PC. Unless you track the markets closely like maybe 5-10% of the country does, it will escape your attention. We saw this in the 1970's when we had gasoline lines NOT because of bad OPEC countries but because of price controls put in place by politicians. If you need proof on the bailout nonsense, ask yourself how many news stories you have seen on the $36 billion bailout of the Teamsters CSPF Pension Plan, which will cost the taxpayers far more than TARP made.
My guess is you didn't see a single story on that ERISA and SEC/IRS/DOL fraud and abomoniation by government bureaucrats who are more worried about hedge funds cheating other hedge funds with questionable information than outright fraud by those who say they are out to look after "The Working Man."
@dcarr said:
The intent of the bailout was not to help shareholders. Citibank made bad choices. They also engaged in unethical dealings. And they made a lot of money that they weren't really entitled to. Their shareholders deserved what they got (although bank management did not get what they deserved). The interconnected incestuous relationship between the FED and the banks could not allow the Citibank domino to fall. So Citibank was supported (yes, bailed out) to the extent necessary to keep it from toppling over into the next domino.
But the bank wasn't in need of a "bailout." Banks run into temporary liquidity issues because of the nature of banking. It's the nature of fractional reserve banking.
They didn't engage in unethical dealings -- unless you mean making no-down and low-down mortgages to PC-groups mandated by HUD, Fannie, FHA, and Freddie. The government -- NOT the Fed -- wanted those mortgages made....the Fed (Greenspan) was lobbying to END the policy and the POLITICIANS and GSEs fought it tooth and nail. I know -- I hosted these lobbyists for my trade group.
Sorry, but being diluted 90% is not being "bailed out." It's in the governments best interests to support banks rather than have to create new ones...pawn the assets off on other banks.....or have the govt run them.
.
Citibank was not forced to make low-equity, no-equity, and negative-equity home loans.
The entire system needed a bailout to keep it from collapsing into the "abyss". Citibank was on the edge of it. Citibank's stock declined significantly, but intervention prevented the bank from total failure.
Citibank most certainly did engage in unethical business dealings.
In 2007 they convinced the dolts on the board of the Denver Public School system to buy into Citibank's offering of interest rate swaps. Citibank knew it was a total crap deal for DPS, but the bank didn't care. They took DPS for $275 million. The students suffered. But even worse, the City & County of Denver decided the best way to pay for the bad deal was to jack up property taxes. So Denver property owners ended up paying.
@derryb said:
The initial 2008-09 bailouts may have enriched banks/bankers but it did save the banking industry and therefore the common folk who depend on it.
Yes, success and failure are to be shared.
Banks/bankers got bonuses while the common folk got higher prices. Sharing? LOL
Yes, higher prices in their 401ks, homes, and coin collections.
Comments
No, it was an administrative fee. The big $$$ were from the Citibank preferred and common shares.
Citibank got a total of $45 BB. The government made about $13 BB. Meanwhile, Citibank common stock for the shareholders is less than 1/10th the 2007 price.
Some "bailout" !!
Meanwhile, unions and S&L politicians are being bailed out with NO responsibility for their fiscal mismanagement in part because people are focused on non-existend Wall Street bailouts.
The Fed is the most transparent institution we have. Exactly what don't you know about ?
Uh, no they wouldn't. AIG had the assets to pay it off 100 cents on the dollar but not at that time because everything froze up. It was a $12 BB payment and GS would have gotten about $6-$8 BB.
Their equity capital was about $50 BB so a $4-$6 BB hit is just a scratch. Particularly after TARP $$$.;
People who think the Wall Street banks were in trouble simply can't read a balance sheet. I see these jokers all the time and they are just regurgitating slop they read on the Internet.
I owned GS bonds so I was watching GS balance sheet and stock price every few minutes (!) for DAYS. Trust me, if they had "serious finanacial trouble" my team and I would have dumped the bonds pronto (like with Lehman Brothers).
this is because most Americans (who are also heavily in debt) do not understand the meaning of "fiscal management." Majority of the remaining Americans realize their choices in these politicians means little to nothing.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
How much gold and silver is actually in the vault would be a good starting point. A thorough and truly independent audit is needed.
FED meetings are in reality corporate board meetings. What comes out from behind the closed (non-transparent) door is simply what they and their counterparts in public office think we should believe. Being the financier of congress's unlimited need for stupid money protects them from actual and effective congressional oversight.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Lack of proper risk assessment (greed), while using other people's money, is what got them in trouble.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
I owned GS bonds so I was watching GS balance sheet and stock price every few minutes (!) for DAYS. Trust me, if they had "serious finanacial trouble" my team and I would have dumped the bonds pronto (like with Lehman Brothers).
Apparently, you don't know what you don't know, to wit:
FOR IMMEDIATE RELEASE
Thursday, September 20, 2018
Contact: Nick Jacobs, 202-618-6430 or njacobs@bettermarkets.com
Email shows Goldman admitted it was “toast” and only survived due to government bailouts
Washington, D.C. – On the tenth anniversary of Morgan Stanley and Goldman Sachs failing on Friday, September 20, 2008, Dennis Kelleher, President and CEO of Better Markets, issued the following statement:
“Goldman Sachs has relentlessly tried to rewrite the history of the 2008 crash, pretending that it was never at risk of failure. That is simply false. As proved by an email from ten years ago (reproduced below), Goldman Sachs was ‘toast’ and would have gone bankrupt but for being bailed out by the United States government and taxpayers. Those bailouts saved the bank and the jobs, status and wealth of all the Goldman bankers. For example, the astronomical wealth of CEO Lloyd Blankfein, former President Gary Cohn and all the other Goldman partners only exists today because they were bailed out. Just like the shareholders in bankrupt Lehman Brothers, their stock and options would have been worthless, including the recently reported $3 billion ‘Goldman partners’ haul on crisis-era options.
“We know this because, ten years ago today, just five days after Lehman Brothers filed for bankruptcy, four days after the $85 billion bailout of AIG, and days after Treasury Secretary Paulson effectively nationalized the $3.7 trillion money market industry via a guaranty program, Morgan Stanley called New York Fed President Tim Geithner to inform him that it would not be able to open its doors on Monday and Goldman admitted that, if that happened, it was ‘toast,’ as reflect in an internal Fed email (reproduced below).
“While many are remembering the 10th anniversary of the collapse of Lehman Brothers and the onset of the worse financial crash since 1929, there is too much spin, self-congratulation and omission or denial of the actual facts. As we have detailed, the crash had many causes, but a big one was the reckless and illegal activities of Wall Street’s too-big-to-fail firms, which were nonetheless bailed out without any accountability. On this 10th anniversary, it is important to remember that Goldman Sachs and the other too-big-to-fail financial firms only exist today due to the generosity and decisive role of the U.S. government and taxpayers in stopping the crisis and saving those Wall Street giants with trillions of dollars in bailouts. False narratives, forgetting or ignoring those facts and so many others may be comforting to those on Wall Street and their allies, but it blinds them to what is happening in the country and why.”
This email was from Michael Silva who was the chief of staff and senior vice president for the Executive Group at the New York Fed, and relates to a phone call from Morgan Stanley (MS) to Timothy F. Geithner (TFG), then President of the Federal Reserve Bank of New York, about it and Goldman Sachs (GS).
I knew it would happen.
What is the data they are using? Powell all but admitted that the government data they have been using is not accurate (jobs numbers and the constant corrections). Are inflation numbers that are massaged to eliminate basic necessities what we should be using?
What is more important, employment or inflation? We have heard both. I am not saying this is not a difficult tap-dance, but what if we knew what the Fed's acceptable unemployment number is, modeling is easier. Economists that I have seen guess between 4 and 4.5% - and what job numbers are you using? The BS numbers that have been released all year and corrected by 900K at this point? Regarding inflation, they say 2% inflation is the goal, but we also know that is BS based on their recent rate cuts. Again, I realize this is tough when Yellen is stabbing you in the back with her policies. Maybe a little transparency that the Fed's hands are tied regarding inflation when the Treasury and government spending is working against them. If they are truly independent (lol) he could speak freely and be transparent
GF, I normally agree with your posts, but being the "most transparent institution" is like being the best looking in an ugly contest.
Dennis Kelleher is a financial doofus. Goldman Sachs paid back the TARP $$$ within 9 months. I don't think a bank that was "toast" would have been able to pay back that loan WITHOUT diluting their shareholders as was done by Citibank. Kelleher can't read a balance sheet and is very quiet on how a $4 BB hit imperils a bank with $50 BB in equity capital.
But he sure remained quiet when the Teamsters Pension Plan, the UAW, and Detroit penisoners were bailed out with free money that will NEVER be paid back.
1 more thing: both Goldman and JP Morgan asked to NOT receive TARP $$$. Doesn't sound like they really needed the money, huh ? They were forced at gunpoint to take the TARP $$$ so as not to "stigmatize" other more needy TARP recipients.
There's a difference between TRANSPARENCY and ACCURACY. You are correct that there are big changes in data, revisions, benchmark revisions, etc. But the Fed deals with the information that it has at that moment. In that respect, they do the best they can with the information they have AT THAT TIME.
Have you seen the press conferences like last week's after the FOMC meets to decide on Fed policy ? Jay Powell speaks about what the Fed is up to....and then....he takes Q&A for 45 minutes from the press who can ask him ANYTHING about the economy.
You think politicians do that with spending, entitlements, etc. ? No way.
It's ridiculous that the Fed -- which made the government about $500 BB in "profits" the last 10-12 years -- gets attacked by folks who have no better plan for a monetary system. The profit center gets attacked...the cost centers get a free pass.
We middle class folks attack the FED because they are enriching the top 10% at our expense. Their modern management of our economy is designed for this result and they have been 100% successful.
Defenders of our central bank are normally those that profit in some way at the expense of the innocent outsiders. The economy is not a "market," it is a specific money movement system that is forced on everyone. It should be designed and operated in a way that does not take from some to enrich others. Such enrichment should be limited to valid markets that are tightly regulated. I am a strong supporter of maximum employment and stable prices and the FED should be limited to this mandate. After all, theses are the limitations that allowed it to be forced on us by our elected leaders.
The price of gold is the true tool for measuring the FED's ability to do it's authorized job.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
" No, it was an administrative fee. The big $$$ were from the Citibank preferred and common shares. "
It can be called whatever..... it still released Citigroup from the agreement they had entered into and were bound by.. and the release was to their advantage (Citigroup).
A bailout is still a bailout. You had made a statement to the effect that the FED does NOT bail out banks. I think the examples given appear to disprove that assertion.
Really ? So the shareholders were "bailed out" and are sitting with a 90% loss ?
How come "bailouts" for politically connnected special interest groups don't include a 90% haircut ? 
I'm sorry, but "bailout" to me means you got money you weren't entitled to. Since some banks didn't even WANT the TARP $$$ and others got diluted to hell, it seems asinine to me to say the banks got "bailed out." Since the Treasury made $$$ on the policy, no bailout took place.
Explain the advantage in having your shareholders diluted 90% ? Have you punched up a long-term chart of Citibank ? The release was NOT to Citibank's advantage, it was an administrative detail. You think Citibank was going to be part of the U.S. Treasury for years and decades ?
.> @GoldFinger1969 said:
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The intent of the bailout was not to help shareholders. Citibank made bad choices. They also engaged in unethical dealings. And they made a lot of money that they weren't really entitled to. Their shareholders deserved what they got (although bank management did not get what they deserved). The interconnected incestuous relationship between the FED and the banks could not allow the Citibank domino to fall. So Citibank was supported (yes, bailed out) to the extent necessary to keep it from toppling over into the next domino.
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Never forget.
Those bailouts saved the bank and the jobs, status and wealth of all the Goldman bankers. For example, the astronomical wealth of CEO Lloyd Blankfein, former President Gary Cohn and all the other Goldman partners only exists today because they were bailed out. Just like the shareholders in bankrupt Lehman Brothers, their stock and options would have been worthless, including the recently reported $3 billion ‘Goldman partners’ haul on crisis-era options.
I knew it would happen.
The initial 2008-09 bailouts may have enriched banks/bankers but it did save the banking industry and therefore the common folk who depend on it. Destruction of a national economy leads to destruction of the nation that hosts it. Problem lies in once FED/Treas. Dept. learned they could print endless amounts of money without blowing up the economy they continued to do so carelessly ever since then (various forms of QE) at the expense of higher inflation. Since this magic money tree (MMT) tool continues to be at their disposal they have become more careless in their oversight of the economy. They now have this escape hatch from their mismanagement.
True definition of economic inflation is an increase in the money supply. The result is higher price inflation.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Yes, success and failure are to be shared.
Knowledge is the enemy of fear
Banks/bankers got bonuses while the common folk got higher prices. Sharing? LOL
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
There was some Muppet band with a song called "The Song Remains the Same" Expect MUCH MORE of the same. RGDS!
The whole worlds off its rocker, buy Gold™.
The problem is they've essentially removed the consequence of pain from bad decisions. If I thought I was immortal, I would live my life differently than I do today. But it's the threat of pain and death that keep me from making decisions with bad health implications. Once you've removed the ultimate penalty of bankruptcy, liquidation, and failure, banks and others are encouraged to act with reckless abandon. Is that preferable? Perhaps if the safety net wasn't there we wouldn't get into these predicaments or they wouldn't be as bad.
And one with a song called "Won't Get Fooled Again."
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
How about "You never give me your money, you only give me your funny paper". The Beatles
But the bank wasn't in need of a "bailout." Banks run into temporary liquidity issues because of the nature of banking. It's the nature of fractional reserve banking.
They didn't engage in unethical dealings -- unless you mean making no-down and low-down mortgages to PC-groups mandated by HUD, Fannie, FHA, and Freddie. The government -- NOT the Fed -- wanted those mortgages made....the Fed (Greenspan) was lobbying to END the policy and the POLITICIANS and GSEs fought it tooth and nail. I know -- I hosted these lobbyists for my trade group.
Sorry, but being diluted 90% is not being "bailed out." It's in the governments best interests to support banks rather than have to create new ones...pawn the assets off on other banks.....or have the govt run them.
You must have forgot.
The wealth of the Goldman partners was NEVER in doubt because the equity capital never dipped below $50 BB. I know -- I was tracking it minute-by-minute in September and October 2008.
Lehman Brothers CEO Dick Fuld lost $700,000,000 in stock, RSUs, and options. Your source clearly wasn't tracking the crisis, this was known by September 16th. Goldman and JP Morgan shares bottomed 3 trading days later; Citibank 5-6 days later.
All of the people you guys quote are financial liars and ignoramuses. They have nothing to say about REAL bailouts because those bailouts benefit their political interests (i.e., members of a certain political party, unions).
$2 trillion is unfunded in pensions/OPEBs for S&L govts. and not a peep from the same frauds who use ERISA to mandate companies fund corporate benefits (except when it leads to union layoffs, then forebearances are given).
The government MADE $$$ on TARP. The "bailout" made them money. But the "bailout" for certain politically-connected groups will NOT make the taxpayers $$$. $36,000,000,000 went down the tubes bailing out the Teamsters CSPF and nobody is talking about it because "Wall Street greed" is a better narrative -- if false -- than "union and political party slush fund" used to siphon off retiree benefits.
Wall Street is for The Rich. Unions are for The Little Guy. I know -- I heard it on CNN. And MSNBC. And ABC. And CBS. And ABC.
Nonsense....when the government declared a Bank Holiday in 1933, did it "bail out" millions of American's deposits ? Maybe the average American should have gotten daily or weekly balance sheets on their banks sent by Western Union to make sure they put their money in safe banks ?
I'm assuming they didn't have internet or Bloomberg access in 1933 which would have made that moot !!
While I think tighter controls could be implemented to tie executive pay to stock price performance....and while I think CEO pay is partly disconnected to shareholder performance...to say that banks are immune from bad decisions is prepestorous. That's what the media elite -- mostly financial ignoramuses -- want you to think:
It's a lot easier to cry about "Wall Street bailouts" then tell the truth about REAL bailouts, PC. Unless you track the markets closely like maybe 5-10% of the country does, it will escape your attention. We saw this in the 1970's when we had gasoline lines NOT because of bad OPEC countries but because of price controls put in place by politicians. If you need proof on the bailout nonsense, ask yourself how many news stories you have seen on the $36 billion bailout of the Teamsters CSPF Pension Plan, which will cost the taxpayers far more than TARP made.
My guess is you didn't see a single story on that ERISA and SEC/IRS/DOL fraud and abomoniation by government bureaucrats who are more worried about hedge funds cheating other hedge funds with questionable information than outright fraud by those who say they are out to look after "The Working Man."
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Citibank was not forced to make low-equity, no-equity, and negative-equity home loans.
The entire system needed a bailout to keep it from collapsing into the "abyss". Citibank was on the edge of it. Citibank's stock declined significantly, but intervention prevented the bank from total failure.
Citibank most certainly did engage in unethical business dealings.
In 2007 they convinced the dolts on the board of the Denver Public School system to buy into Citibank's offering of interest rate swaps. Citibank knew it was a total crap deal for DPS, but the bank didn't care. They took DPS for $275 million. The students suffered. But even worse, the City & County of Denver decided the best way to pay for the bad deal was to jack up property taxes. So Denver property owners ended up paying.
Yes, higher prices in their 401ks, homes, and coin collections.
Knowledge is the enemy of fear