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07-01-2010, 10:38 AM   #1
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Bankers and book keeping

Funny stuff.............
QuoteQuote:
WASHINGTON (MarketWatch) -- A panel looking into the 2008 financial crisis lashed out at Goldman Sachs executives Thursday for failing to provide specific data on its derivatives profits during the buildup to the crisis.
"I am very skeptical that you really can't measure these derivatives revenues and profits," said Brooksley Born, former Commodity Futures Trading Commission chairwoman and now a member of the Financial Crisis Inquiry Commission. "I urge you to provide us with the information we are asking for; it's been about six months.
"You don't give it to your regulators; you don't give it to the market in financial reports; you don't give it in any forum in which your customers can see what you're making, and you are refusing to give it to us," she said. "I hope very much to see it soon."

David Viniar, Goldman Sachs Group's chief financial officer, repeatedly argued that the Wall Street powerhouse) doesn't break out derivatives profits from the rest of its profits.
However, this didn't pass muster with an exasperated Phil Angelides, chairman of the 10-member bipartisan commission set up under the Fraud Enforcement and Recovery Act of 2009.
"Are you telling me you have no system that tracks revenues and liabilities and payments of those contracts and that you have no financial reports that tracks these contracts?" Angelides asked.
Financial crisis panel takes Goldman Sachs to task - MarketWatch
AND a flaw in the bailout???
QuoteQuote:
A Legal Waiver

Unknown outside of a few Wall Street legal departments, the A.I.G. waiver was released last month by the House Committee on Oversight and Government Reform amid 250,000 pages of largely undisclosed documents. The documents, reviewed by The New York Times, provide the most comprehensive public record of how the Federal Reserve Bank of New York and the Treasury Department orchestrated one of the biggest corporate bailouts in history.

The documents also indicate that regulators ignored recommendations from their own advisers to force the banks to accept losses on their A.I.G. deals and instead paid the banks in full for the contracts. That decision, say critics of the A.I.G. bailout, has cost taxpayers billions of extra dollars in payments to the banks. It also contrasts with the hard line the White House took in 2009 when it forced Chrysler’s lenders to take losses when the government bailed out the auto giant.
http://www.nytimes.com/2010/06/30/business/30aig.html?src=me
Man this is funny..........
http://seekingalpha.com/article/212637-the-inexplicable-aig-waiver
QuoteQuote:
Each of AIG-FP and AIG Inc, for good and valuable consideration, the sufficiency of which it hereby acknowledges, forever releases the Counterparty from any and all Claims of any nature whatsoever that AIG-FP or AIG Inc ever had, now has or can, shall or may have, by reason of any matter, cause or thing occurring from the beginning for the world to the Termination Date that arises out of or in any way relates to the CDS Transactions.
QuoteQuote:
The answer of course is that it was not in AIG’s interest to agree to this waiver, and it really didn’t get much if anything in the way of good and valuable consideration from Goldman or anybody else. But the waiver was forced on AIG by the government, and specifically by Treasury and the New York Fed. Treasury was full of old Goldman hands, including Hank Paulson and Dan Jester; the Fed, too, was and is much closer to Goldman than to AIG.
The whole thing is very smelly, and I’d love to see a better reason for the waiver’s existence than this:
David Moss, the Harvard professor, said the government might have been concerned that the insurer would use taxpayer money to sue banks. “The question is: was this legitimate?” he asked. “The answer depends on the motivation. If the reason was to avoid a slew of lawsuits that could have further destabilized the financial system in the short term, this may have been reasonable.”

But the fact is that wasn’t the reason:
Dang it gets worse...............
QuoteQuote:
Two important points which are discussed in great detail below:

* Dan Jester was "as useless as tits on a bull" in securing forbearance from the ratings agencies. This sealed AIG's fate and guaranteed a bailout.

* Seeking to avoid public scrutiny into the role he played while CEO of GS, Paulson installed former Goldman executive Edward Liddy as CEO of AIG to quietly pay out $18.7 billion (highlighted below) to AIG counterparties, thereby sealing the fate of any negotiations.
http://dailybail.com/home/how-paulson-appointees-former-gs-employees-dan-jester-ed-lid.html


Last edited by jeffkrol; 07-01-2010 at 11:26 AM.
07-01-2010, 11:03 AM   #2
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Interesting. Goldman is one of the few invesment banks where derivatives isn't on a separate system... I'm sure they are playing dumb by stating the true fact that their top line reporting won't necessarily break these out. But of course each desk has its own P&L - how else do they argue for their bonuses? - and Goldman has a much vaunted risk management system - the thing that they were so proud of when they managed to be on the right side of much of the meltdown. StoneWall Street
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