Treasurey secretary paulson is the former CEO of Goldman Sachs

The only Wall Street chief executive participating in the meeting was Lloyd C. Blankfein of Goldman Sachs, Mr. Paulson’s former firm.


AIG failure would have created a hole as big as $20 billion in Goldman's balance sheet.


Now this guy Paulson wants $700 billion to dole out to his other friends?

you guys should be hearing what Newt was saying tonight on fox

prolific

I think he will explode it out on O'Rielly tomorrow night

AIG Bailout Saved Goldman From Major Loss




Gretchen Morgenson in the New York Times reports that Goldman and no other Wall Street firm was involved in the AIG rescue talks and an AIG failure would have created a hole as big as $20 billion in Goldman's balance sheet.

This is special dealing, pure and simple. Even if AIG needed to be salvaged (there was considerable agreement on this point), having Goldman deeply involved in the process is cronyism. But that's been a staple of this Administration.

From the New York Times:

As the group, led by Treasury Secretary Henry M. Paulson Jr., pondered the collapse of one of America’s oldest investment banks, Lehman Brothers, a more dangerous threat emerged: American International Group, the world’s largest insurer, was teetering. A.I.G. needed billions of dollars to right itself and had suddenly begged for help.

The only Wall Street chief executive participating in the meeting was Lloyd C. Blankfein of Goldman Sachs, Mr. Paulson’s former firm. Mr. Blankfein had particular reason for concern.

Although it was not widely known, Goldman, a Wall Street stalwart that had seemed immune to its rivals’ woes, was A.I.G.’s largest trading partner, according to six people close to the insurer who requested anonymity because of confidentiality agreements. A collapse of the insurer threatened to leave a hole of as much as $20 billion in Goldman’s side, several of these people said.....

A Goldman spokesman said in an interview that the firm was never imperiled by A.I.G.’s troubles and that Mr. Blankfein participated in the Fed discussions to safeguard the entire financial system, not his firm’s own interests.

If you believe that, I imagine you believe in the tooth fairy too. Goldman had $45 billion of equity as of its last balance sheet date. A loss, if it approached $20 billion, in this general environment of worries about financial firms, would have sent Goldman shares into a tailspin, and the rating agencies have started taking a dim view of overlevered financial firms that appear unable to raise equity on reasonable terms. This certainly would have lead to a downgrade, and that has put other firms on a slippery downward slope.

Note the article contains a recitation of denials later in the piece that the damage would have been as large as $20 billion or that Goldman's exclusive role in the talks was self-interested.

The rest of the story focuses on how the credit default swaps operation, a small unit at AIG, was allowed to take on risks that brought a sizable and otherwise highly successful firm to its knees. It is a riveting read.

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Here's my questions:
1.Who and How did they come up with 700 billion as a figure?
2.who is actually going to get the money?
3.how is it going to be disbursed?
4.what guarantee do we have on it's usage? (IE is it going to cover debt or can just anyone grab some and add it to profit?)
5.Are only the big dogs going to get in on the scam?
6.most importantly, how are we going to get paid back?

I have a lot more but these will do for starters.

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Life is good, the water is sweet. The ground keeps moving beneath my feet.

Of course Big P.. this is a robbery.. "stick em up and hand over the money or the economy gets it"..

Basically, the plan is to buy mortgage-backed securities at low low prices. Then, as the economy improves, fix up the properties and sell them at a profit for the taxpayer. They also want to charge insurance on some mortgages, that the banks would pay to us to guarantee the mortgages. (The better the insurance, the more they pay.)

They've got a few levels of transparency and oversight built in, but the ultimate decision on which mortgages to purchase and which to insure would be left to the Treasury Department to decide, based on what has the greatest chance of producing a decent return for the taxpayer investment.

I wouldn't worry about Paulson -- his tenure is up in around six weeks, and I doubt he'll be back if Obama wins the election. If McCain wins, I dunno.

What they WANT to do is something similar to what Sweden did when they had a mortgage run-up and then a financial meltdown similar to ours. What Sweden did was nationalize some ailing institutions (banks) and mortgages. They acted quickly, so they basically stomped on the fire before it got too big. Their taxpayers made about 6 dollars in profit from each dollar they invested, and now Sweden's economy is fully recovered and roaring along.

The problem with that plan is that speed is of the essence. We don't see the fire burning, but it's been growing for about two weeks. Beyond a certain point, there is no stopping it, and then it'll cost multiple trillions in taxpayer bux to recover. By waiting, we're trading a $700 billion bailout now for a multi-trillion dollar loss in a year. Mostly, it'll be the poor and middle class who eat that cost, whether it's the $700b now or the trillions later. Take your pick. I'd personally rather pay upfront than delay and pay five times as much in a year.