Wednesday, July 22, 2009

The Magnanimity of the Magnificent...

Stop the haggling - we want to be generous!

That's the news coming out of Goldman Sachs' PR office today. They've bought back warrants from the feds for $1.1 billion - the full value as determined by the feds.

Just a few weeks ago, Goldman had wanted to pay just $650 million for the warrants.

Lloyd Blankfein, Goldman CEO, had this to say in the press release:

“This return is reflective of the government’s assistance, which benefitted the financial system, our firm and our shareholders,” said Lloyd C. Blankfein, Chairman and CEO. “We are grateful for the government efforts and are pleased that this additional money can be used by the government to revitalize the economy, a priority in which we all have a common stake.”

He added, “Because Goldman Sachs advises companies with their growth plans and raises capital to support that growth, the best and most sustainable operating environment for us is one where consumer and business confidence and economic growth flourish. We are committed to allocating capital and providing liquidity to our clients to help stimulate growth and job creation.”

Goldman was nice enough to calculate the return on the taxpayers investment in Goldman: 23 percent.

Nice to see TARP making some money for the government. The $500 million difference that Goldman decided to hand back to the feds pales in comparison, however, to the billions and billions that have flowed from Treasury to companies like Goldman (the AIG unwind - the $12.8 billion in AIG money that went to Goldman was all thanks to the feds! And TALF loans that they've used for some nice profits.)

I want the math geniuses at Goldman to calculate the return they've received thanks to the government's investment in them. Billions in profits going toward billions in bonuses. A far bigger return than the extra few millions they paid out (after much haggling) to the feds for the TARP warrants....

Other links to follow...

Zero Hedge's take...

Wall Street Journal story...

WaPo story on Wall Street bonuses...

WaPo story on the buy-back of the warrants...


1 comment:

Taunter said...

Pales in comparison to the billions we left on the table in this investment, to begin with:

http://tauntermedia.com/2009/07/25/bad-math-worse-investors/

If someone in Goldman's investing arms structured a deal as poorly on their account as Hank Paulson structured TARP on behalf of the taxpayer, he would be fired for his own safety.

Crazy thing is, people have such a psychological anchor around break-even that conventional wisdom is that we are seeing a good outcome.