27-01-2012, 12:57 AM
NEW DETAILS: How Goldman Sachs Killed AIG
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Much of what William Cohan has uncovered from newly released FCIC testimony has been hit already by Janet Tavakoli, including in this piece: An important point not mentioned by Cohan below is that by the time Goldman began entering into CDS contracts with AIG, they were often creating the underlying securites. That is to say, Goldman had a hand in making the CDOs, so they knew that the CDS had a better chance of paying off than AIG assumed when they wrote the contracts.
Cohan, via the FCIC report, does however provide amazing new detail and general color of the internal back-and-forth with Goldman execs, including the possibility of collusion between Goldman and French bank Société Générale, who pocketed more than $16 billion from U.S. taxpayers via AIG.
--
Background... --
How Goldman Sachs Killed A.I.G.
by William Cohan
The conventional wisdom has it that the final report of the [URL="http://dailybail.com/home/new-details-how-goldman-sachs-killed-aig.html#"]
For instance, on the exceptionally important but little understood role played by the increasingly [URL="http://dailybail.com/home/new-details-how-goldman-sachs-killed-aig.html#"]
As the crisis unfolded Goldman marked mortgage-related securities at [URL="http://dailybail.com/home/new-details-how-goldman-sachs-killed-aig.html#"]
The first victims of Goldman's decision in May 2007 to begin communicating its lower marks to the rest of the marketplace were the two Bear Stearns hedge funds that were heavily invested in complex and squirrelly mortgage securities. Although Goldman disputes the charge, the lower marks caused the two hedge funds to recalculate the funds' net asset value, known in the business as N.A.V., and to re-issue to investors in June 2007 a far lower N.A.V. down 19 percent, rather than down 6 percent. All hell broke loose. Soon enough, the funds' investors were blocked from withdrawing their money, and by July the funds filed for bankruptcy and were soon liquidated. Investors lost much of the $1.5 billion they had invested. The liquidation of the two hedge funds led to the collapse of Bear Stearns nine months later.
Continue reading at the New York Times...
--
Janet Tavakoli offers additional detail...
Further reading...
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Jan 26, 2012 at 12:00 PM
****
http://dailybail.com/home/video-jamie-di...senti.html
video embedded
VIDEO - Jamie Dimon Tells Charlie Gasparino: Anti-Banking Sentiment Is 'A Form Of Discrimination'
Video - Jamie Dimon on Obama, the 2012 election and Occupy Wall Street - Jan. 24, 2012
You'll remember that Dimon made a similar complaint to Bernanke last year during a public Q&A from the Fed Chairman.
Listen up, Dimon. The Fed is your one and only best friend, secretly passing you trillions, and you decide to complain publicly about stronger capital requirements and regulators who might actually be doing the job, of well, regulating. If it's a free market he's after, then let's be clear: there's no Federal Reserve, no discount window borrowing, and no bailouts.
Guess what that means, Jamie? There's no JP Morgan.
Goodbye and good riddance.
---
Source - Huff Po
Jamie Dimon, the head of JPMorgan Chase, would like to make it clear that he is not that kind of banker.
"I've disagreed right from the beginning of this blanket blame of all banks. I don't like that. I think that's just a form of discrimination that should be stopped."
Dimon, who has been CEO of JPMorgan Chase since 2005, didn't get specific about whom he'd rather not be lumped in with. He seemed, though, to be trying to draw a distinction between his own company -- which accepted a bailout from the Troubled Asset Relief Program, but is generally seen as having weathered the financial crisis better than many other major firms -- and banks that needed a greater degree of government assistance during and after the meltdown.
But Dimon's critics may not be persuaded by his argument. After all, JPMorgan Chase received $25 billion through the U.S. Treasury under TARP and at least $3 billion from the Federal Reserve in 2008 -- the same year that Dimon took home about $19.7 million in salary, stock and options. Dimon's compensation later climbed to $23 million in 2010 and 2011, as JPMorgan overtook Bank of America to become the nation's largest bank by assets.
Pay packages on that scale are unlikely to endear Dimon to his detractors, of which he has many.The Occupy Wall Street movement has demonstrated at Dimon's speaking events and organized marches outside JPMorgan Chase buildings. Politicians -- including President Obama -- have said that the lopsided concentration of wealth in America is contributing to the country's economic woes.
Even so, when Gasparino brought up the Occupy movement, Dimon struck a diplomatic tone, discussing the protests in language that was almost identical to comments he made in November.
"There are parts I agree with and there are parts I don't," Dimon told Gasparino. "It is fair for the average American to say that the major institutions of America let me down. That's true. And it is fair, generically, to say that it was predominantly Wall Street and Washington... I think once you go beyond that, and say all politicians, all banks, all bankers -- that's terrible. I don't accept that."
The interview was taped shortly before Dimon left for the World Economic Forum summit in Davos, Switzerland, where Dimon said he will be speaking with other attendees about financial regulation. At last year's Davos summit, Dimon made similar remarks pushing back against the vilification of the banking industry, calling it "a really unproductive and unfair way of treating people."
---
Related stories:
Jan 26, 2012 at 11:50 AM
Much of what William Cohan has uncovered from newly released FCIC testimony has been hit already by Janet Tavakoli, including in this piece: An important point not mentioned by Cohan below is that by the time Goldman began entering into CDS contracts with AIG, they were often creating the underlying securites. That is to say, Goldman had a hand in making the CDOs, so they knew that the CDS had a better chance of paying off than AIG assumed when they wrote the contracts.
Cohan, via the FCIC report, does however provide amazing new detail and general color of the internal back-and-forth with Goldman execs, including the possibility of collusion between Goldman and French bank Société Générale, who pocketed more than $16 billion from U.S. taxpayers via AIG.
--
Background... --
How Goldman Sachs Killed A.I.G.
by William Cohan
The conventional wisdom has it that the final report of the [URL="http://dailybail.com/home/new-details-how-goldman-sachs-killed-aig.html#"]
Financial
[/URL] Crisis Inquiry Commission was a low-budget flop, hopelessly riven by internal political disputes and dissension among the commission's 10 members. As usual, the conventional wisdom is completely wrong. Actually, the report and the online archive of testimony, interviews and documents that are now available is a treasure trove of invaluable information about the causes and consequences of the Great Recession.For instance, on the exceptionally important but little understood role played by the increasingly [URL="http://dailybail.com/home/new-details-how-goldman-sachs-killed-aig.html#"]
lowerprices
[/URL] Goldman Sachs placed on the complex mortgage securities on its balance sheet which helped determine the fate of many of its shakier Wall Street brethren the commission report, on page 237, is crystalline:As the crisis unfolded Goldman marked mortgage-related securities at [URL="http://dailybail.com/home/new-details-how-goldman-sachs-killed-aig.html#"]
prices
[/URL] that were significantly lower than those of other companies. Goldman knew that those lower marks might hurt those other companies including some clients because they could require marking down those assets and similar assets. In addition, Goldman's marks would get picked up by competitors in dealer surveys. As a result, Goldman's marks could contribute to other companies recording "mark-to-market" losses: that is, the reported value of their assets could fall and their earnings would decline.The first victims of Goldman's decision in May 2007 to begin communicating its lower marks to the rest of the marketplace were the two Bear Stearns hedge funds that were heavily invested in complex and squirrelly mortgage securities. Although Goldman disputes the charge, the lower marks caused the two hedge funds to recalculate the funds' net asset value, known in the business as N.A.V., and to re-issue to investors in June 2007 a far lower N.A.V. down 19 percent, rather than down 6 percent. All hell broke loose. Soon enough, the funds' investors were blocked from withdrawing their money, and by July the funds filed for bankruptcy and were soon liquidated. Investors lost much of the $1.5 billion they had invested. The liquidation of the two hedge funds led to the collapse of Bear Stearns nine months later.
Continue reading at the New York Times...
--
Janet Tavakoli offers additional detail...
Further reading...
- Who Is Dan Jester And Why Did Tim Geithner Call Him 103 Times During The Financial Meltdown Of 2008?
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- NEW DETAILS: How Goldman Sachs Killed AIG
- VIDEO - Jamie Dimon Tells Charlie Gasparino: Anti-Banking Sentiment Is 'A Form Of Discrimination'
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Jan 26, 2012 at 12:00 PM ****
http://dailybail.com/home/video-jamie-di...senti.html
video embedded
VIDEO - Jamie Dimon Tells Charlie Gasparino: Anti-Banking Sentiment Is 'A Form Of Discrimination'
Video - Jamie Dimon on Obama, the 2012 election and Occupy Wall Street - Jan. 24, 2012
You'll remember that Dimon made a similar complaint to Bernanke last year during a public Q&A from the Fed Chairman.
Listen up, Dimon. The Fed is your one and only best friend, secretly passing you trillions, and you decide to complain publicly about stronger capital requirements and regulators who might actually be doing the job, of well, regulating. If it's a free market he's after, then let's be clear: there's no Federal Reserve, no discount window borrowing, and no bailouts.
Guess what that means, Jamie? There's no JP Morgan.
Goodbye and good riddance.
---
Source - Huff Po
Jamie Dimon, the head of JPMorgan Chase, would like to make it clear that he is not that kind of banker.
"I've disagreed right from the beginning of this blanket blame of all banks. I don't like that. I think that's just a form of discrimination that should be stopped."
Dimon, who has been CEO of JPMorgan Chase since 2005, didn't get specific about whom he'd rather not be lumped in with. He seemed, though, to be trying to draw a distinction between his own company -- which accepted a bailout from the Troubled Asset Relief Program, but is generally seen as having weathered the financial crisis better than many other major firms -- and banks that needed a greater degree of government assistance during and after the meltdown.
But Dimon's critics may not be persuaded by his argument. After all, JPMorgan Chase received $25 billion through the U.S. Treasury under TARP and at least $3 billion from the Federal Reserve in 2008 -- the same year that Dimon took home about $19.7 million in salary, stock and options. Dimon's compensation later climbed to $23 million in 2010 and 2011, as JPMorgan overtook Bank of America to become the nation's largest bank by assets.
Pay packages on that scale are unlikely to endear Dimon to his detractors, of which he has many.The Occupy Wall Street movement has demonstrated at Dimon's speaking events and organized marches outside JPMorgan Chase buildings. Politicians -- including President Obama -- have said that the lopsided concentration of wealth in America is contributing to the country's economic woes.
Even so, when Gasparino brought up the Occupy movement, Dimon struck a diplomatic tone, discussing the protests in language that was almost identical to comments he made in November.
"There are parts I agree with and there are parts I don't," Dimon told Gasparino. "It is fair for the average American to say that the major institutions of America let me down. That's true. And it is fair, generically, to say that it was predominantly Wall Street and Washington... I think once you go beyond that, and say all politicians, all banks, all bankers -- that's terrible. I don't accept that."
The interview was taped shortly before Dimon left for the World Economic Forum summit in Davos, Switzerland, where Dimon said he will be speaking with other attendees about financial regulation. At last year's Davos summit, Dimon made similar remarks pushing back against the vilification of the banking industry, calling it "a really unproductive and unfair way of treating people."
---
Related stories:
Jan 26, 2012 at 11:50 AM
"Where is the intersection between the world's deep hunger and your deep gladness?"