You all remember GS saying they had “no material risk” in the event of default by AIG, since they were “properly hedged”.

Neil M. Barofsky has just asserted that this was categorically untrue, and has done so in a report asserting that any negotiations away from the 100 cents on the dollar paid by the Fed would have most certainly produced a loss.

In other words, the Fed was the hedge that GS indicated was both non-governmental, and in place well before the Fed intervened.

Geithner, was then asked if he’d ever actually inspected any of these famous hedges (i.e. the private ones GS said it had, as opposed to the public one it was actually counting on) he was forced to concede that no, he had not.

Nevertheless, he felt confident saying that the deal with GS was “sickening” it was also “the very best one that the taxpayers could have gotten” which is all so ferociously damning I don’t even know where to begin.

Apparently, it never occurred to him that giving GS the benefit of the doubt about their vital importance to the world’s banking system (and 100 cents on the dollar) could be used as leverage to insist that no profits could be taken before TARP funds were repaid in full, and – more importantly – GS had refunded 40-60 cents on those counterparty claims once the crisis had passed (i.e. now – at bonus season).

And so what if ‘talent’ leaves? It transpires that, had the Fed not intervened, they’d all be gone – Bear Stearns style.

Okay, you say, but that’s not how bankers think. Screw them on their bonuses (even if they screwed you to get them) and they’ll walk. They have no honor, and in the wake of their departure, the firm will go down.

But again, this is simply not a credible threat compared with what Geithner had in his whip hand. Had he actually performed the most cursory check of those highly improbable hedges, he’d have seen that a proper deal would have given GS a choice between instant death or the possibility of a fatal blow a year or so down the line.

Which – by the way – sounds like a very elegant solution to the “too big to fail” problem – though not half as elegant as paying those bonuses using the toxic assets that the US Taxpayers are now holding.

Sadly, Obama is displaying Bush-grade loyalty to people who’ve demonstrated little loyalty of their own towards the country they ’serve’.

In any case, it will be interesting to see how much more credibility Obama manages to squander as those payouts start hitting bank accounts scattered throughout tax havens in Europe and the Caribbean.

You all remember GS saying they had “no material risk” in the event of default by AIG, since they were “properly hedged”.

Neil M. Barofsky has just asserted that this was categorically untrue, and has done so in a report asserting that any negotiations away from the 100 cents on the dollar paid by the Fed would have most certainly produced a loss.

In other words, the Fed was the hedge that GS indicated was both non-governmental, and in place well before the Fed intervened.

Geithner, was then asked if he’d ever actually inspected any of these famous hedges (i.e. the private ones GS said it had, as opposed to the public one it was actually counting on) he was forced to concede that no, he had not.

Nevertheless, he felt confident saying that the deal with GS was “sickening” it was also “the very best one that the taxpayers could have gotten” which is all so ferociously damning I don’t even know where to begin.

Apparently, it never occurred to him that giving GS the benefit of the doubt about their vital importance to the world’s banking system (and 100 cents on the dollar) could be used as leverage to insist that no profits could be taken before TARP funds were repaid in full, and – more importantly – GS had refunded 40-60 cents on those counterparty claims once the crisis had passed (i.e. now – at bonus season).

And so what if ‘talent’ leaves? It transpires that, had the Fed not intervened, they’d all be gone – Bear Stearns style.

Okay, you say, but that’s not how bankers think. Screw them on their bonuses (even if they screwed you to get them) and they’ll walk. They have no honor, and in the wake of their departure, the firm will go down.

But again, this is simply not a credible threat compared with what Geithner had in his whip hand. Had he actually performed the most cursory check of those highly improbable hedges, he’d have seen that a proper deal would have given GS a choice between instant death or the possibility of a fatal blow a year or so down the line.

Which – by the way – sounds like a very elegant solution to the “too big to fail” problem – though not half as elegant as paying those bonuses using the toxic assets that the US Taxpayers are now holding.

Sadly, Obama is displaying Bush-grade loyalty to people who’ve demonstrated little loyalty of their own towards the country they ’serve’.

In any case, it will be interesting to see how much more credibility Obama manages to squander as those payouts start hitting bank accounts scattered throughout tax havens in Europe and the Caribbean.

You all remember GS saying they had “no material risk” in the event of default by AIG, since they were “properly hedged”.

Neil M. Barofsky has just asserted that this was categorically untrue, and has done so in a report asserting that any negotiations away from the 100 cents on the dollar paid by the Fed would have most certainly produced a loss.

In other words, the Fed was the hedge that GS indicated was both non-governmental, and in place well before the Fed intervened.

Geithner, was then asked if he’d ever actually inspected any of these famous hedges (i.e. the private ones GS said it had, as opposed to the public one it was actually counting on) he was forced to concede that no, he had not.

Nevertheless, he felt confident saying that the deal with GS was “sickening” it was also “the very best one that the taxpayers could have gotten” which is all so ferociously damning I don’t even know where to begin.

Apparently, it never occurred to him that giving GS the benefit of the doubt about their vital importance to the world’s banking system (and 100 cents on the dollar) could be used as leverage to insist that no profits could be taken before TARP funds were repaid in full, and – more importantly – GS had refunded 40-60 cents on those counterparty claims once the crisis had passed (i.e. now – at bonus season).

And so what if ‘talent’ leaves? It transpires that, had the Fed not intervened, they’d all be gone – Bear Stearns style.

Okay, you say, but that’s not how bankers think. Screw them on their bonuses (even if they screwed you to get them) and they’ll walk. They have no honor, and in the wake of their departure, the firm will go down.

But again, this is simply not a credible threat compared with what Geithner had in his whip hand. Had he actually performed the most cursory check of those highly improbable hedges, he’d have seen that a proper deal would have given GS a choice between instant death or the possibility of a fatal blow a year or so down the line.

Which – by the way – sounds like a very elegant solution to the “too big to fail” problem – though not half as elegant as paying those bonuses using the toxic assets that the US Taxpayers are now holding.

Sadly, Obama is displaying Bush-grade loyalty to people who’ve demonstrated little loyalty of their own towards the country they ’serve’.

In any case, it will be interesting to see how much more credibility Obama manages to squander as those payouts start hitting bank accounts scattered throughout tax havens in Europe and the Caribbean.

http://www.boingboing.net/2009/11/15/un-goons-destroy-aca.html

How about that kind of behavior from our bankers? How long will we accept it?

Let the loans default. At least in a third world nation we may get it through our heads we have to help each other instead of locking ourselves up in ever more isolated upscale walled gardents.

This is one the Goobers may have right: it’s time to question the value of the UN and our memberships in the so-called Internet Governance organizations.

http://www.boingboing.net/2009/11/15/un-goons-destroy-aca.html

How about that kind of behavior from our bankers? How long will we accept it?

Let the loans default. At least in a third world nation we may get it through our heads we have to help each other instead of locking ourselves up in ever more isolated upscale walled gardents.

This is one the Goobers may have right: it’s time to question the value of the UN and our memberships in the so-called Internet Governance organizations.

Can you spell “Schadenfreude?” Remember your Capital-ization rules, kiddies…

Can you spell “Schadenfreude?” Remember your Capital-ization rules, kiddies…