Post by unlawflcombatnt on Apr 12, 2009 16:31:09 GMT -6
Karl Denninger asks the question about whether Goldman-Sachs got paid double for their assets--1st through a private hedge, and 2nd by US taxpayers as a counterparty/creditor from the $180 billion AIG bailout.
Goldman (and other banks') "Hedges"
Sunday, April 12, 2009
by Karl Denninger
"There is a rumor about Goldman Sachs flying around on the street - allegedly they are about to report their 2nd-best quarter in history, +$12 billion or so.
In addition, there is this from Bloomberg:
Gee, you don't think being paid by the taxpayer through AIG's "conduit" for losses that didn't (yet) happen at 100 cents on the dollar might have anything to do with that, do you?
And further (and potentially much worse) there is the repeated statement by Goldman executives that they were "fully hedged" against a potential counterparty default by AIG.
One wonders - was that "hedge" to be short the equity on AIG itself, perhaps?
Why is this important?
Because if that's how Goldman hedged they got paid twice and the taxpayer literally got robbed.
Someone in Congress needs to look into this now; there are already rumblings of investigation. Those rumblings need to get a lot louder and turn into subpoenas, not "polite inquiries."
If in fact Goldman (or anyone else) was "hedged" against a possible credit loss from their CDS with AIG and they were able to collect on that hedge (no matter what it was) those payments through AIG need to be clawed back immediately as nobody is entitled to be paid twice for the same risk and reap what amounts to a windfall profit by quite literally engineering a multi-billion dollar transfer of funds from the Taxpayer to the firm!
This is not small potatoes either - we're talking $100 billion+ in aggregate with these various banks on a worldwide basis.
We the people deserve answers on this right now and if persons in our government handed these banks $100 billion dollars of our tax money for what was a covered bet, allowing them to collect twice on a risk that had not yet been realized (when at most they were entitled to collect once via their private hedging activity) every single person involved in that scandal must be immediately removed from office, prosecuted if possible, and every nickel of those funds must be clawed back by whatever means are necessary."
market-ticker.denninger.net/archives/953-Goldman-and-other-banks-Hedges.html
Goldman (and other banks') "Hedges"
Sunday, April 12, 2009
by Karl Denninger
"There is a rumor about Goldman Sachs flying around on the street - allegedly they are about to report their 2nd-best quarter in history, +$12 billion or so.
In addition, there is this from Bloomberg:
Gee, you don't think being paid by the taxpayer through AIG's "conduit" for losses that didn't (yet) happen at 100 cents on the dollar might have anything to do with that, do you?
And further (and potentially much worse) there is the repeated statement by Goldman executives that they were "fully hedged" against a potential counterparty default by AIG.
One wonders - was that "hedge" to be short the equity on AIG itself, perhaps?
Why is this important?
Because if that's how Goldman hedged they got paid twice and the taxpayer literally got robbed.
Someone in Congress needs to look into this now; there are already rumblings of investigation. Those rumblings need to get a lot louder and turn into subpoenas, not "polite inquiries."
If in fact Goldman (or anyone else) was "hedged" against a possible credit loss from their CDS with AIG and they were able to collect on that hedge (no matter what it was) those payments through AIG need to be clawed back immediately as nobody is entitled to be paid twice for the same risk and reap what amounts to a windfall profit by quite literally engineering a multi-billion dollar transfer of funds from the Taxpayer to the firm!
This is not small potatoes either - we're talking $100 billion+ in aggregate with these various banks on a worldwide basis.
We the people deserve answers on this right now and if persons in our government handed these banks $100 billion dollars of our tax money for what was a covered bet, allowing them to collect twice on a risk that had not yet been realized (when at most they were entitled to collect once via their private hedging activity) every single person involved in that scandal must be immediately removed from office, prosecuted if possible, and every nickel of those funds must be clawed back by whatever means are necessary."
market-ticker.denninger.net/archives/953-Goldman-and-other-banks-Hedges.html