Like a lot of folks, Dylan Ratigan is outraged by the fact that Goldman Sachs (GS) is profiting handsomely so soon after the entire financial system was bailed out. That’s fair, but to make the argument most effectively, the numbers we use should be grounded in fact. Here’s what Ratigan says about the $10 billion Goldman made in trading and principal investments this quarter:
That $10 billion is evidence of their magic trick. For we the taxpayer gave Goldman Sachs the following:
- $10 Billion in TARP
- $11 Billion from the Fed
- $30 Billion from the FDIC
- $13 Billion from AIG
For a grand total of almost $70 Billion (Goldman along with every other bank and AIG would have been defunct without this money).
Goldman at the apex of the crisis is delivered this money — which they then use to borrow against at $20 or $30 for every $1. Which at 30x equals $2.1 trillion in available capital.
As one of the only banks in the world with money at the time, Goldman Sachs was able to buy billions in distressed assets around the world at record low prices — only to watch $23.7 trillion in US taxpayer money be deployed during the past year to re-inflate the asset’s values that Goldman had purchased with our tax money.
Ok, the $10 billion Goldman received in TARP is totally true, though they paid it back. And they certainly benefitted from the AIG bailout. But they certainly did not receive $30 billion from the FDIC — presumably, though he’s talking about the TLGP, which is FDIC-guaranteed debt. And the $11 billion from the Fed is also a loan, not a taxpayers gift — why this matters is that Ratigan claims they’ve borrowed up to $2.1 trillion against this money, but, uh… where? When did that happen? He just asserts that they got this money “…which they then use to borrow against at $20 or $30 for every $1. Which at 30x equals $2.1 trillion in available capital.” but someone actually had to lend them just under $2.1 trillion.
Then, to back up the idea that Goldman has taken this $2.1 trillion and bougt a whole bunch of distressed assets with it, he points to an article from April 1, speculating that perhaps Goldman Sachs might participate in the PPIP, which has hardly gone anywhere, and what little has come of it, Goldman hasn’t been part of it.
So, sure, let’s move to aggressively end whatever guarantees (explicit or implicit) there are of the financial system, etc. But let’s keep things in perspective.
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