Updates: These short positions GS took are the AIG CDS’ we lost billions on?! Golden Slacks getting hammered by SEC fraud charges…
Update: Oh shxt! I didnt realize the short positions they are talking about are the damn AIG CDS!!! Oh snap! These are the frakkin CDS we lost BILLIONS on via AIG! h/t doc holiday:
Skeptical CPA: December 2008Re: “Some of AIG’s speculative bets were tied to a group of [CDOs] named ‘Abacus,’ created by [GSG]. … In what amounted to a side bet on the value of these holdings, AIG agreed to pay [GSG] if the mortgage debt declined in value and would receive money is it rose. … The plan has resulted in banks in North America and Europe emerging as winners: They have kept the collateral they previously received from AIG and received the rest of the securities’ value in the form of cash from Maiden Lane III. … It also has been a double boon to banks and financial institutions that specifically bought protection on now shaky mortgage securities and are effectively being made whole on those positions by AIG and the [Fed]”, my emphasis, Serena Ng, Carrick Mollenkamp & Michael Siconolfi at the WSJ, 10 December 2008.”
Update: Cramer is all over CNBC saying his confidential high sources say GS had a position , long, in the CDO, really laying it on shilling for Golden, really sad. Saying its caveat emptor the German bank who took losses is responsible, while he is saying GS was long the position. Shill Jim shill. wow some guy(silvan raines, sp?) says Cramer takes money from GS to his face on the air just now, heh.
Update: Here is Boehner stmt, he calls GS Pres Obamas top Wall St Ally, oohhh, nice:
“These are very serious charges against a key supporter of President Obama’s bill to create a permanent Wall Street bailout fund. Despite President Obama’s rhetoric, his permanent bailout bill gives Goldman Sachs and other big Wall Street banks a permanent, taxpayer-funded safety net by designating them ‘too big to fail.’ Just whose side is President Obama on?
“Instead of permanent bailouts for President Obama’s Wall Street allies, Republicans believe the best way to protect taxpayers is by reforming Fannie Mae and Freddie Mac, the government-sponsored companies that sparked the meltdown by giving high-risk loans to people who couldn’t afford it.”
NOTE: Goldman Sachs was President Obama’s top Wall Street contributor during the 2008 election cycle, donating nearly $1 million to his campaign.
Update: John Boehner GOP minority leader House, just put a wicked spin on that ball, his statement said these charges against GS a partner in Pres Obamas Fin Reg Plan are very concerning, that the FIn Reg Reform Bill will protect GS as too big to fail, Boehner said, whose side is President Obama on? oooooohhhh!! ^5 to Boehner
Update: So I was thinking the Volcker Rule is gonna make a BIG comeback off this, ya know? I mean WSJ was just declaring it dead, again, this week and I do not see how the banks are gonna fight Volcker Rule and the Consumer Protection Thingy in the face of the headlines the lamestream put together off this. And it is things like this that kill the markets for everyone, thanks GS you frakkers.
12:51pm EST: DOW down 153 now, back under 11k, like Spinal Tap, it goes to eleven..that’s about all that number was worth…S&P back under the big 1200 the traders were so excited about…GLD, OIL, all down…
Update: Steve Liesman – Paulson’s right hand man, Pelligrini, was source of confirmation for the fraud charges in re his selection of the ‘lousy’ subprime securities that went into the CDO. He left Paulson in 2009. Steve says what Paulson did is likely not illegal, the issue is disclosure and that is all on GS…
Paging Andrew Cuomo, will Andrew Cuomo please file an indictment on the white courtesy phone….
Update: WSJ has the SEC complaint up in pdf here
Update Q/A Adam Schapiro of FoxBiz asks other fin firms did this, on synthetic CDOs like Deutsche Bank, are they facing charges?
ongoing investigation is the answer
DOW is tanking, down 75 now, GS down 20 (12%)
Q- Why Paulson not charged?
A- Paulson didnt make the representation to the long investors, GS did.
Update:11:11 am est: SEC conf call LIVE on CNBC now!
they chose which MBS would make up this CDO, J Paulson had significant role in building product, had incentive to choose worst rated MBS to put in the CDO and then they took a short position against it
the prospectus for the long investors in the CDO revealed none of this including Paulsons role..
long investors lost $1b, paulson made $1b
Sing with me!
Karma chameleon baby
CNBC Chyron: SEC charges GS with FRAUD ON SUBPRIME SECURITIES
Muhhuuuuhaaaaa!!!!!
SEC: GS misstated, omitted key facts related to subprime products
SEC: (John) Paulson & Co had hand in structuring CDO in question
SEC grew a pair, hoocodanode!
Hank Paulson on the Hill…
Reminder, here is where we were almost a year ago now, the world was ending and Hank was in a sea of flotsam and jetsom trying to keep us afloat..do I like what he did, hell no, am I glad TOTUS and Timmeh werent alone at the reins then? Hell yes!
Update: Video as it is available…
Watching them grill Hank on the Hill
Live feed here
IMO this is bad, very very bad..
This is what they would do with a CIA investigation of ‘Torture’…go back and question shxt they knew about and never opened their mouths about before to look good….
They are going back and questioning every aspect of decisions they KNEW at the time were being madem, that they rolled over for..
After 9/11, after the collapse of Lehman, things were not ‘normal’
Never thought I could feel bad for Hank but I do..
This is a witch hunt and a kangaroo court and a clusterfark all rolled into one…
These people have NO CLUE about the financial system, and the things they are allowing Team TOTUS to do RIGHT NOW IMO far outweigh what Hank did with TARP and BofA and Merrill…
Shit Chrysler Senior Debtholders were threatened a few months ago, none of these Congress critters made a peep..
These are the same tools who LOVED them some Hank in October of 2008…
Hank does not look well….
The Critters are frankly really interrogating him at this point…cutting him off…beating him up and bullying him in fact with emails he has never seen…this is a guy they schmoozed like crazy, a guy who like it or not saved the system form collapsing, I do not agree with everything they did and didnt want TARP but we HAVE A FINANCIAL SYSTEM TODAY b/c Hank did something, unlike the Congress who was clueless and led by Nancy who was busy interfering with national elections and not minding the store….
Dennis Kucinich has bene on a MISSION to get Ken Lewis fired and BofA shareholders a nifty lawsuit, he is on CNBC now attacking Paulson….
Update 2:Rep Jeb Hensarling on his deTARP legislation: Treasury says 10 banks can repay TARP money…
Update 2:
Right on baby, Free the Markets!!!
Interview with Rep. Jeb Hensarling (R) of Texas (Bloomberg News)
CNBC reports that TARP payback DOES get these firms out from under executive compensation guidelines (until the new pay czar sets up suggestions for non tarp firms that is) however, the WARRANTS are still outstanding AND the restrictions on hiring foreign workers still seem to be in force….IOW Congress still has their hands in the pie….
Update: the who’s who of paybacks:
JPMorgan $25b
Golden Slacks $10b
Morgan Stanley $10b (John Mack was all if Golden pays back I get to pay back too dammit, good for Mack)
US Bancorp $6.6b
AMEX $3.6B
Capital One $3.55 b (this one makes NO sense to me, they also were NOT told to raise capital in the stress tests, bizarre with credit card delinquency rates rising rapidly, betcha we see more about ole capital one soon)
BB & T $3.1b
Bank of NY $3.0 b
State Street $2.6 b
Northern Trust $1.57b
TOTAL 69.02b
Here is the shxtty part Timmeh has told Congress he and Team TOTUS believe they have LIMITLESS authority to REUSE ANY MONEY paid back into TARP INDEFINITELY for any purpose they damn well please..so NONE of this money will actually get back to taxpayers and reduce the ginormous deficit….
Rep. Jeb Hensarling (R-TX) is now proposing legislation to end the TARP program to try and stop them…right now they have an unlimites slush fund…
FREE THE MARKETS!
The part we need to watch is the warrants, can they buy them back..and is Treasury still planning to recycle the TARP funds endlessly as it sees fit….
Background from CNBC:
…The government is expected as soon as Tuesday to say which banks are on the list. The amount to be returned could be as much as $50 billion — twice the amount Treasury first estimated it would get back.
In addition to Morgan Stanley// and American Express banks expected to get the green light to pay back TARP money include Goldman Sachs Group JPMorgan Chase State Street and U.S. Bancorp
Meanwhile , Elizabeth Warren head of the TARP oversight panel says the banks need to be stress tested again right now, maybe she noticed that the stress test guidelines used a lower unemployment figure than we are currently experiencing….and since the banks refused to participate in PPIP, they are all still holding those toxic assets, the MBS on their books. Since FASB changed the mark to market rule they now have no impetus to sell those assets…we are right back where we were when Paulson initiated TARP….waiting for the housing fall to stop....
Breaking: TARP Repayment by Banks…Teh Roolz…
Steve Liesman breaking it on CNBC now..Charlie Gasparino has been calling TARP The Roach Motel..
FED: Supervisors now having discussions with several banks to repay TARP
Supervisors are requesting supplemental information for TARP repayment (WTH do they need after stress tests!)
No TARP repayment announcements expected until after June 8th
Supervisor will make recommendations on TARP repayment to the Treasury in batches (so no bank stands alone)
TARP repayment recommendations will be made to Treasury on monthly basis
Source: Treasury to announce process for auctioning TARP warrants in next several days
Treasury plans to spread out auction of warrants over several months
TEH ROOLZ TO REPAY TARP:
1. After repayment, still have to be able to pass stress test
2. Issue unguaranteed debt (no FDIC backup for you!)
3. Demonstrate ability to self-fund in the market (raising private capital)
4. Approval of supervisor
Dilution from repaying TARP: (Gov’t shares controlled by warrants as % of shares outstanding):
JPM 2.35%
Morgan Stanley 5.22% (OUCH!)
Golden Slacks 2.42%
Moderate in the Middle 