Tuesday, December 28, 2010

Goldman Sachs Repays Bailout Funds With Federal-Taxpayer Money It Received?

This doesn't make sense. So the Feds just bought up everything, made Goldman Sachs take the money and then within days of receiving the TARP funds, Goldman Sachs returns the money saying they repaid the TARP funds? That's like asking a friend for $10, your friend gives you the $10 then within seconds, you return the $10 and say "I paid you back" and then everything is all good.

I've been reading a few articles before this one that was pretty much saying that most of these banks that took taxpayer money to bail them out, really didn't need it and are hording their stash adding to the debate that there's no capital out there to hire people, etc and that many of these institutions were really NOT "too big to fail" as originally noted and used as part of the basis for the TARP funds being approved.

Also via WSWS - "While most of the Federal Reserve emergency programs were wrapped up by 2010, the government has continued to hide losses incurred from them. For instance, the Federal Reserve is holding over $1 trillion of largely worthless mortgage-backed securities on its balance sheet, insisting that they can eventually be sold at full price".

Yeah, OK.

Via Economic Policy Journal: On June 17, 2009, Goldman finally got its wish, thanks to some timely, undisclosed assistance from the Federal Reserve. Goldman repaid its $10 billion TARP loan. But just six days before this announcement, Goldman sold $11 billion of MBS to the Fed. In other words, Goldman “repaid” the Treasury by secretly selling illiquid assets to the Fed.

One month later, Goldman’s CEO Lloyd Blankfein beamed, “We are grateful for the government efforts and are pleased that [the monies we repaid] can be used by the government to revitalize the economy, a priority in which we all have a common stake.”

As it turns out, the government continued to “revitalize” that small sliver of the economy known as Goldman Sachs. During the three months following Goldman’s re-payment of its $10 billion TARP loan, the Fed purchased $27 billion of MBS from Goldman. In all, the Fed would purchase more than $100 billion of MBS from Goldman during the 12 months that followed Goldman’s TARP re-payment.

Read the whole thing here

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