But it’s after 5 the night before a 3-day and if I can speak freely? I need to get out of here and can’t wade through this story just now. Also, while I’m sure there’s many a gem to be found within, based on an intimate knowledge of the firm, plus the article’s dek (“When it comes to its role in the financial crisis, Goldman Sachs has a message for the world”), there’s no need. If I know my Masters of the Universe– and I think I do!– the message is this: “blow us.” Or variants thereof. Prove me wrong.
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- Use the Bloomberg command
NH BLG_DEALBREAKER <GO>
to access Dealbreaker
Go into my head, come back out, and tell me I’m wrong.
BL: from the voices of angels.
You nailed it.
LvP
Janet was at goldman. didn’t know that.
Ahem! Plebe Imposter @3
I was about to postulate that Ms. Levin has once more evinced her ability for succintly expressing the gist of a magazine article. And in her commoners’ vernacular that one finds so endearing (if one might say so.)
The stink eye up close is just creepy.
http://kinglab.district65.net/default.asp
Literary Elements
Book Report
Name Oberlin 3rd Year Intern
Date 4/2/10
Title “Goldman Sachs: Don’t Blame Us”
Author Roben Farzad
Characters: Name and describe the main characters:
CEO Lloyd Blankfein– unskilled joke teller, post “Times” interview publicity-shy
CFO David Viniar– frustrated, abstemious with mortgage market trading facts
Goldman Employee– Gordon Gekko replica, greedy manipulators
Goldman clients– rich, worth at least $10mm
US taxpayers– suckers, always losing to Goldman in a coin toss
US Government– gullible
Co-head Global Securities Harvey Schwartz– agitatable, forgetful of history(“It’s categorically impossible for us to take down a firm[AIG].” n.b.– Long Term Capital Partners)
Setting: Name and Describe where and when the story takes place
Where- Global financial markets; new $2.1billion, highly tax-breaked headquarters; Wall Street
When- Eighteen months removed from the depths of the financial crisis
Plot: Retell the important events in the story in order-include
the beginning, middle and end. 9 sentences or more.
1- Everybody but Goldman thinks Goldman are “the toxic epicenter of everything wrong with Wall Street.”
2- Various facts are presented to valid the claim.
3- Goldman, realizing the reputational damage the firm is sustaining, especially given they lost out to Morgan Stanley in a Citigroup share placement, sets out to explicitly defend its conduct.
4- Goldman makes top officials, bar Lloyd Blankfein, available for press interviews.
5- Harvey Schwartz becomes agitated defending Goldman, flailing an open palm in the air.
6- Goldman invokes the QIB caveat emptor defence.
7- Author cites some data-mined CDO study that only takes bull period 2002-2007 into account as weak proof that Goldman is the toxic epicenter to everything wrong with Wall Street.
8- “Goldman produces math showing that only a relatively small amount—$2.5 billion—was actually a new transfer of funds to the firm itself…” from the Fed bailout of the firm, in an attempt to minimize the fact that Goldman claimed as its own the $10billion ++ cash collateral they already took from AIG.
9- Author ends article with rhetorical question: “ Has Goldman Sachs shorted itself?“
And screw you Volcker:
http://www.bloomberg.com/apps/news?pid=20601109&sid=ayxzpC_3PkUw
Oberlin@#7…
Very nice book report; however, why the link to some school district in Illinois?
“Goldman is the toxic epicenter to everything wrong with Wall Street.” TGFD certainly agrees. I have yet to see an argument anywhere that credibly justifies the gov’t decision to hand $10 Billion of borrowed taxpayer money to Goldman through the AIG window.
The Guy from Delaware
@9 maybe the govt just wanted GS to have a little fun money?
More importantly, why would anyone make such a big deal about being from Delaware? Kind of lame…
Goldman still doesn’t get it, if they would just concede some mistakes like John Mack did and a few others on the street did some of the heat would come off them…They aren’t going to win a standoff
@6 Naaa son, LB don’t need a scale for the work, he can eyeball purp
@7 Good E, but the assignment was to prove Bess wrong. Pretty much impossible if we were talking about the old, pre-Barnett-Hart Goldman, who can’t sneak anything past her. But behold the new Goldman! I have to say, I would’ve expected you Baldwin Cottage types to catch on a little quicker.
The new Goldman Sachs is including a handwritten letter with its annual next week, on perfumed stationery, SWAK, and they made everyone who matters (ouch, LvP!) sit down with BW for a cover story. Lloyd “was not made available, despite repeated interview requests,” a point you can be sure that simple country reporter Charlie Gasparino will investigate next week (confidential to CG: she was feeling bloated).
After throwing out a few big-sounding numbers and rehashing some familiar criticism, even quoting wingnut-anarchist-conspiracy-theorist William K.Black (“Every game has a sucker and in this case, the sucker was not so much AIG as it was the U.S. government and taxpayer.”), BW author Farzad formally enumerates the charges on page two:
(a) “Goldman duped AIG and, subsequently, the U.S. government” on CDS trades,
(2) they bet against their clients,
and (d), they rigged their CDOs to blow up.
Farzad shares a little of his personal horror story about life inside the soul-killing man-culture that was the old Goldman Sachs (“fix your tie!” they bellowed), and then walks us into the new “hush-hush quiet” HQ where “well-groomed handlers” lead us to the new, pussified Harvey Schwartz, who, “more suburban tee-ball coach than Hermès-clad master of the universe, had just broken his shoulder while skiing. His arm was in a sling.”
Schwartz, frantically flapping his wings, claims that Goldman couldn’t hurt a fly let alone take down AIG. Betting against clients? The mere suggestion makes him sigh. You people just don’t understand! Goldman is just a sweet old shadchan, that’s all.
Oh and on point (d) about the toxic CDOs? Farzad cites cultural catalyst A.K. Barnett-Hart herself, whose thesis “concluded that Goldman’s CDOs performed better than all other major underwriters’.” Plus, CDO investors were “sophisticated.”*
Viniar says, essentially, that you can’t blame them for being just a bunch of stupid girls caught up in events completely beyond their power to anticipate or influence: “‘I wish we knew as much as people are giving us credit for knowing,’ says Viniar. ‘Nobody–certainly not us–knew the depths of the financial crisis we were going to face.’” CRO Broderick, likewise, had “honestly no conception until late in the process” that top-rated AIG was anything but “the perfect counterparty.” Driving his point home, Farzad reminds us that Goldman was the one making “incessant … calls [that] caused the relationship between the two financial giants to deteriorate” to that final he-said, she-said level where the Fed had to step in.
“In the end, Goldman asserts, the secret to its success was not that it was smarter than AIG or could divine the future any more clearly or that it had all those government connections” but that Viniar “did the dull, unglamorous” housekeeping that any good SAHM ought to be doing. Unlike, say, those Lehman sluts.
__________
* Farzad strongly suggests that “sophisticated” is code for something. Metrosexual?
@13– @7 here. Not fair. I was basing my book report on the 1st graders’ format of the Chicago Magnet School. I was hoping my challengers would follow suit, hence the weblink to the format. I’ve been obviously out-smarted by you, plus for the fact that I have a few errors in my report(eg- LTCM not LTCP, #2 validate, not valid, #7 goldman is not toxic, rather than the freudian slip, “is toxic,” etc…). I had no intention to prove Ms. L. wrong, merely, to summarize the lengthy article into a format with a wide reach, i.e.– 1st graders and up.
#13, my book report pales to your analysis.
@TGFD
Your #’s re: GS/AIG are off. From SIGTARP Report:
“The Maiden Lane III settlement with Goldman covered $13.9 billion of swaps, however on that portfolio, Goldman already had $8.4 billion of collateral from AIG to cover a drop in value of the underlying to that point based upon AIG’s calculations. However, Goldman calculated the loss was actually $9.6 billion, and had purchased additional protection to cover the difference. Thus, the $8.4 billion in collateral, the $1.2 billion in additional protection, and their calculated FMV of the underlying at that point of $4.3 billion meant Goldman would have been made-whole (received par) if AIG defaulted. “
Anal_Yst@#15…
So what you and the report are saying then is that Goldman would have collected in-full anyway, had AIG defaulted. I guess the gov’t just said, “Oh Well”, and handed Goldman the $10 Billion. I guess Goldman’s claim would have ranked above all others in the invent of BK?
I don’t know where Goldman’s claim would have been in the line. Furthermore, having a claim and then trying to collect from a recalcitrant debtor are two different things.
In taking over AIG, the gov’t could have made it damn difficult for the Goldman to get even a fraction of what they claimed.
Had the gov’t refused Goldman and the two french banks, AIG would have probably used bankruptcy to ensure an orderly selloff of assets and an orderly shutdown.
Maybe Goldman would have got something, and maybe they wouldn’t.
Unless I’m mistaken, once AIG filed for bankruptcy, that “$8.4 Billion of collateral” you mentioned would come under the control of the court, and Goldman would no longer have a lock on it.
In short, the gov’t handed Goldman and the 2 French banks a lot of money right out of the taxpayers’ Treasury, when they really didn’t didn’t have to do so. That’s where the big rub is. That’s why a lot of people are pissed-off at Goldman and at the gov’t.
All those Billions could have been put to much better use…like bolstering-up the FDIC’s kitty so they can continue to pay-off depositors in all those hundreds of banks that keep on failing because of Credit Default Swaps…the same things Goldman made a killing on, thanks to the gov’t.
The Guy from Delaware
@15 IIRC swaps are settled daily, on both the diff in the 2 legs and collateral calls, so GS would have the $8.4B before AIG folded. The only loss would be the marginal collateral call that would make AIG insolvent (GS: we need extra 1B to cover your positions AIG: Ch7/11 bitch)
I bet that’s why they bought the extra 1.2B of protection.
^^^ should be at @16 rather