Having spent most of our time Lloyd Watching, we haven't observed Goldman President Gary Cohn in the brush too much. Gotta say though, we are digging his style. Watch here how he finds the loophole during a talk with the WSJ re: which bank will be the *FIRST* to repay its TARP money, (verbally) throws the interviewer on his back and says "No, sir, we will indeed quibble over semantics." (We also enjoy the uncanny resemblance to Champ Kind, who will play him in the movie.)
WSJ: One question on everyone's mind's and us and other have raised it several times in the last few days is...does Goldman become the first to give back TARP money?
Cohn: I don't know.
WSJ [confused]: Why not?
Cohn: I can't speak for everyone else who has it. [Since the question was, "will GS be the first," and, conceivably, for all we know, Ken Lewis could be paying BAC's money back right this second, making GS the second to repay.]
WSJ: But you're the president of Goldman Sachs [can 't you speak for yourself?]
Cohn: There may be someone giving it back right now.
WSJ: [Figuring out where he's going with this] Could be.
Cohn: Could be.
[stare each other down]
Cohn: I would have no idea. If you got all the TARP recipients up here maybe we could come up with an answer to that.
The Federal Reserve has this new paper out about TARP that does a bit of highly suggestive eyebrow raising about some banks that shall remain nameless. They start from the awkward fact that TARP wanted everything in one bag but didn't want the bag to be heavy, or as they put it: The conflicted nature of the TARP objectives reflects the tension between different approaches to the financial crisis. While recapitalization was directed at returning banks to a position of financial stability, these banks were also expected to provide macro-stabilization by converting their new cash into risky loans. TARP was a use of public tax-payer funds and some public opinion argued that the funds should be used to make loans, so that the benefit of the funds would be passed through directly to consumers and businesses. So you might reasonably ask: were TARP funds locked in the vault to return the recipient banks to financial health, or blown on loans to risky ventures, or other? Well, here is Figure 1 (aggregate commercial and industrial loans from commercial banks in the U.S.): So ... not loaned then. But that's not important! The authors are actually looking not primarily at aggregate amounts of loans but at riskiness of loans and here's what they get: