• This is a political forum that is non-biased/non-partisan and treats every person's position on topics equally. This debate forum is not aligned to any political party. In today's politics, many ideas are split between and even within all the political parties. Often we find ourselves agreeing on one platform but some topics break our mold. We are here to discuss them in a civil political debate. If this is your first visit to our political forums, be sure to check out the RULES. Registering for debate politics is necessary before posting. Register today to participate - it's free!

Goldman's bailout earns $1.4bn profit for taxpayers

RightinNYC

RightinNYC

Girthless
DP Veteran
Joined
Mar 21, 2005
Messages
25,893
Reaction score
12,484
Location
New York, NY
Gender
Male
Political Leaning
Slightly Conservative
Goldman's bailout earns $1.4bn profit for taxpayers - Business News, Business - The Independent

American taxpayers have made a $1.418bn profit on the $10bn federal loan handed to Goldman Sachs when the financial system was at risk last October.

The investment bank yesterday finalised its exit from the government bailout, saying it would pay $1.1bn to buy back warrants issued to the US Treasury as part of the loan agreement.

Goldman and eight other major banks were told to accept bailout money last October in order to restore confidence in the US banking system, and hundreds of smaller banks followed suit. The government has received dividends on the loans and will also receive cash for the warrants if banks decide to repay the money early.
Click to expand...

The US Treasury said yesterday that the $1.1bn and $318m in dividends paid by Goldman Sachs meant that taxpayers' emergency investment in the company had earned them an annualised return of 23 per cent.
Click to expand...

Those bastards.

Of course, I doubt this will get as much press as their other evil decision to give their employees a large portion of the profits they've produced.

(Just to preempt the inevitable "BUT THEY TOOK 16 BILLIONS FROM TEH AIG!!1": Goldman Sachs - Wikipedia, the free encyclopedia)
 
This is politics at its finest. This is information that we all knew would happen. Yes we LOANED them the money, with interest. Some people would have folks believe the bailouts were a complete waste.
 
FreeTh!nk3r said:
This is politics at its finest. This is information that we all knew would happen. Yes we LOANED them the money, with interest. Some people would have folks believe the bailouts were a complete waste.
Click to expand...

I don't think you can lump all the government spending together as "the bailouts" and call them a success or waste. Some of the "bailouts," such as those of companies in the financial industry which were expected to have the capability to pay back the loans, were good ideas. Other "bailouts," such as those to the auto companies, were terrible ideas.
 
RightinNYC said:
Goldman's bailout earns $1.4bn profit for taxpayers - Business News, Business - The Independent





Those bastards.

Of course, I doubt this will get as much press as their other evil decision to give their employees a large portion of the profits they've produced.

(Just to preempt the inevitable "BUT THEY TOOK 16 BILLIONS FROM TEH AIG!!1": Goldman Sachs - Wikipedia, the free encyclopedia)
Click to expand...

The way loans work is that the lender has to be induced to loan the money out over a length of time. This is called the interest.

Obama said tonight the banks are profitable, which is half the story, since they're only profitable because they no longer have to mark their liabilities to market values anymore. That's really a big part of it.
 
Last edited:
Liz Peeps said:
The way loans work is that the lender has to be induced to loan the money out over a length of time. This is called the interest.
Click to expand...

Okay.

Obama said tonight the banks are profitable, which is half the story, since they're only profitable because they no longer have to mark their liabilities to market values anymore. That's really a big part of it.
Click to expand...

link?
 
RightinNYC said:
I don't think you can lump all the government spending together as "the bailouts" and call them a success or waste. Some of the "bailouts," such as those of companies in the financial industry which were expected to have the capability to pay back the loans, were good ideas. Other "bailouts," such as those to the auto companies, were terrible ideas.
Click to expand...

This is honestly one thing that i did agree with President Bush on. Both industries obtained the assistance that they so direly needed. We are already seeing returns on the bailouts made to the financial markets, and i have faith we will see the same in the auto industry.
 
FreeTh!nk3r said:
This is honestly one thing that i did agree with President Bush on. Both industries obtained the assistance that they so direly needed. We are already seeing returns on the bailouts made to the financial markets, and i have faith we will see the same in the auto industry.
Click to expand...

What returns? What we have essentially is a black hole of debt caused by the widespread use of derivative contracts. We started the bailout to herald the survival of this black hole of debt.
 
FreeTh!nk3r said:
Whos debt are you referring too? Once i have that info i can voice my opinion on this one..
Click to expand...

All the debt that was central to the entire banking and credit crisis. That's the debt I'm referring to. When you read about BofA taking over Merrill Lynch despite being trillions in the red, that's the kind of debt I'm talking about.
 
Last edited:
FreeTh!nk3r said:
That makes no sense, because circumstances vary depending on the institution.
Click to expand...

No, it was a system wide crisis. This was like just 9 or 10 months ago. It was HUGE news when it broke, here in America we had to make all kinds of financial arrangements to move those houses and save the banks to hopefully mitigate the damages done to America, everything we could do to maintain high home values. It was a system wide thing that was not limited to a single institution like you're saying.

Think about it, how in the world do you think billion dollar firms get into TRILLIONS of debt?
 
Liz Peeps said:
No, it was a system wide crisis. This was like just 9 or 10 months ago. It was HUGE news when it broke, here in America we had to make all kinds of financial arrangements to move those houses and save the banks to hopefully mitigate the damages done to America, everything we could do to maintain high home values. It was a system wide thing that was not limited to a single institution like you're saying.

Think about it, how in the world do you think billion dollar firms get into TRILLIONS of debt?
Click to expand...

Debt wasnt exactly the only issue that drove the crisis. It was a combination of things from mismanagement, toxic loans, housing market bubble etc. There was a combination of issues that caused the crisis.

Which firm are you referring to once again?
 
FreeTh!nk3r said:
Debt wasnt exactly the only issue that drove the crisis. It was a combination of things from mismanagement, toxic loans, housing market bubble etc. There was a combination of issues that caused the crisis.

Which firm are you referring to once again?
Click to expand...

DEBT was smackdab at the CENTER of the crisis. How do you think a housing bubble would be possible without being able to sell off massive amounts of debt?

The "toxic loans" are just a part of all the debt that I'm talking about. Firms were shuffling debt between themselves, it was like a game with musical chairs. And if you were caught with all the debt when the music stopped then you'd be in big trouble.

"Mismanagement" in that you had people making these contracts and various special purpose entities for their clients only to have it all blow up in their face because it never made any sense in the first place.
 
obvious Child said:
INSTANT VIEW: U.S. eases mark-to-market accounting | Reuters

I talked about this before, essentially financials are now allowed to treat their toxic securities like Level 3 assets. Price them how they want, value them how they want and essentially ignore all reasonable accounting. The longer M2M is suspended, the bigger fraud we'll get in the future.

http://www.debatepolitics.com/us-pa...s/45222-congress-thinks-youre-all-stupid.html
Click to expand...

Setting aside the problems with your position that were raised in that thread, I don't see anything indicating that banks like JPMorgan or GS are "only profitable because they don't have to mark their liabilities to market value," which was my objection to LP's statement.

I very much doubt that M2M is the reason why GS turned a profit last quarter.

FreeTh!nk3r said:
This is honestly one thing that i did agree with President Bush on. Both industries obtained the assistance that they so direly needed. We are already seeing returns on the bailouts made to the financial markets, and i have faith we will see the same in the auto industry.
Click to expand...

The difference is that the financial industry keeps adding value, as it has for decades, while the auto industry keeps sucking ass, as it has for decades.
 
RightinNYC said:
I very much doubt that M2M is the reason why GS turned a profit last quarter.
Click to expand...

Then how did they do it? what happened to the emergency crisis of trillions of debt instruments that was bogging down their books.
 
RightinNYC said:
IB, same way they made their other billions in every other quarter.
Click to expand...

.....which is?

What role to do you think the derivatives market played in this crisis?

link?[/QUOTE]

Sorry, I don't have the energy or will right now to give you a primer on what happened, I'll let obvious child field this one if he feels like it. I'm you could find info on various sides of the argument if you google in "derivatives financial crisis"
 
Liz Peeps said:
.....which is?

What role to do you think the derivatives market played in this crisis?

link?
Click to expand...

Sorry, I don't have the energy or will right now to give you a primer on what happened, I'll let obvious child field this one if he feels like it. I'm you could find info on various sides of the argument if you google in "derivatives financial crisis"[/QUOTE]

That's fine, because I'm not asking for a primer on anything. I'm asking you for a shred of evidence to support your claim that but for M2M, Goldman would not have turned a profit last quarter.
 
RightinNYC said:
That's fine, because I'm not asking for a primer on anything. I'm asking you for a shred of evidence to support your claim that but for M2M, Goldman would not have turned a profit last quarter.
Click to expand...

Are you aware of any bank that did it or is it news to you that the accounting standards change?

I did ask you other questions in the other post to try to learn more about your understanding of the crisis. It was my understanding that debt contracts and debt shuffling special purpose entities are at the core of the problems in the banking structure of much of the world. You conveniently ignored them. I'm not asking you to go dig up stuff on the internet about stuff that you should have been paying attention to as it happened, I'm just asking what do you think is at the core of the crisis. I mean, you seem to think it was a case that could be solved with a simple TARP bill. Is that how it works New York?
 
My problem with the bailouts isn't so much the waste of taxpayer dollars as it is the fact that the government interfered in the economy instead of letting bad businesses die.
 
Dav said:
My problem with the bailouts isn't so much the waste of taxpayer dollars as it is the fact that the government interfered in the economy instead of letting bad businesses die.
Click to expand...

But if you were to go by the original post, this appears to be a huge profit for the taxpayer! Maybe they can send some of that profit my way. They want people to spend, let us have the fruits of our gambled money.
 
Liz Peeps said:
Are you aware of any bank that did it or is it news to you that the accounting standards change?
Click to expand...

I don't know what this means.

I did ask you other questions in the other post to try to learn more about your understanding of the crisis. It was my understanding that debt contracts and debt shuffling special purpose entities are at the core of the problems in the banking structure of much of the world. You conveniently ignored them.
Click to expand...

And it's my understanding that this doesn't have **** to do with what we're talking about, which is whether the easing of accounting rules allowed Goldman to manufacture $3.44b of profit on paper.

Goldman's 10-Q for last quarter is up, so why don't you hop over there and show me where it says that. Here, I'll even give you the link:

Goldman Sachs | Investors - Form 10-Qs
 
You must log in or register to reply here.
Back
Top Bottom