Wall Street's Bailout Hustle

I couldn't work out what forum to post this,as the article is over 36 hours and wouldn't be allowed in the Breaking News Forum ... I thought it was important enough to share with the ATS membership, so decided to post it here.

It's an article in Rolling Stone magazine regarding how 'Goldman Sachs and other big banks aren't just pocketing the trillions we gave them to rescue the economy - they're re-creating the conditions for another crash' ... It covers all the shenanigans big banks like Goldman Sachs and JP Morgan have been getting up to, before, during, and after the government bailouts.

It also goes on to compare what they are doing to the classic 'stings' and 'hustles' used by professional con men. It is really worth reading, highly informative, a real eye-opener, and if it doesn't have your blood boiling by the time you finish reading there's something wrong with you, or you work for the banks.

It's a long, but I emphasize SUPERB article that EVERY American Taxpayer should read

Here's the link:

www.rollingstone.com...

and here's a couple of paragraphs:

The bottom line is that banks like Goldman have learned absolutely nothing from the global economic meltdown. In fact, they're back conniving and playing speculative long shots in force — only this time with the full financial support of the U.S. government. In the process, they're rapidly re-creating the conditions for another crash, with the same actors once again playing the same crazy games of financial chicken with the same toxic assets as before.

That's why this bonus business isn't merely a matter of getting upset about whether or not Lloyd Blankfein buys himself one tropical island or two on his next birthday. The reality is that the post-bailout era in which Goldman thrived has turned out to be a chaotic frenzy of high-stakes con-artistry, with taxpayers and clients bilked out of billions using a dizzying array of old-school hustles that, but for their ponderous complexity, would have fit well in slick grifter movies like The Sting and Matchstick Men. There's even a term in con-man lingo for what some of the banks are doing right now, with all their cosmetic gestures of scaling back bonuses and giving to charities. In the grifter world, calming down a mark so he doesn't call the cops is known as the "Cool Off."

To appreciate how all of these (sometimes brilliant) schemes work is to understand the difference between earning money and taking scores, and to realize that the profits these banks are posting don't so much represent national growth and recovery, but something closer to the losses one would report after a theft or a car crash. Many Americans instinctively understand this to be true — but, much like when your wife does it with your 300-pound plumber in the kids' playroom, knowing it and actually watching the whole scene from start to finish are two very different things. In that spirit, a brief history of the best 18 months of grifting this country has ever seen:

Mods, if this is the wrong forum apologies and please move as appropiate

Oh the banks learned alright - they learned to keep running their schemes as fast and hard as they can so they can get their golden parachutes all set before they implode the system.
Matt taibi did a related story some months ago I thought, is this a continuation? At any rate I know it will be worth the time to read in it's entirety. Thanks for posting this important story.

reply to post by Asktheanimals


I don't think I read the previous Matt Taibi story, but I have to say this one impressed the hell out of me. The clarity with which he explains what they've been up to, the way they've been playing the government and the tax payers, and the clever way he associates everything they've done with some classic stings and hustles, had me rivetted.

I must admit, I'm not from the USA but the shenannigans as described in that article had me fuming by the time I finished reading. Although their actions mostly directly affect US taxpayers and their poor clients, indirectly they affect us all.

I think most people are basically unaware of most of this... If they were to both pay attention to AND understand what has been done to them there would be a major uproar.

Having said that, judging by the interest this thread has garnered (none except for you, so far), I suspect most don't really care that much. It really is a very important story that I really wish people would take the time to read.

Thanks for your reply

online.wsj.com...

While some big banks will be allowed to repay, the Treasury doesn't believe things have improved enough that the money won't be needed elsewhere. Treasury Secretary Timothy Geithner has said he plans to reuse returned TARP funds to assist other firms, including smaller banks, including those that have already received an initial TARP infusion.

The list of large financial firms expected to get the green light on repayment includes American Express Co., Bank of New York Mellon Corp., Capital One Financial Corp., Goldman Sachs Group Inc. and J.P. Morgan Chase & Co.

1) We didn't give them trillions, just hundreds of billions.

2) They did pay the money back.

As far as them just doing what they do best and be crooked bankers, well, yea, they are crooked bankers.

I just want to make sure you know that they did pay the money back first.

reply to post by whatukno


Exactly where did they get the money to repay?

Wasn't it bailout money coming from a different pocket?

Check this link to the Frontline program that aired on Feb 16, titled the Warning. It details how the woman, Brooksley Born, who had the power to stop this mess was stripped of it by Congress when she tried to use it to regulate derivatives and their ilk at the behest of guess who? Rubin, Geithner, Bernanke, Paulson...the very same crew who engineered the bailouts.


www.pbs.org...

reply to post by whatukno


Thanks for the link and the update.

The bailout money they received directly (at least in Goldman Sachs case) was chump change, by comparison to everything else they got up to either side of the bailout . That they've paid it back is no surprise. It's everything else they got up to either side of the bailout, and as a result of the bailout, that I find outrageous.

It;s really hard to start giving examples without quoting large chunks of trhat Rolling Stone article... the author explains everything far better than I could in a million years.

There is so much to read in that article I urge everyone who has the time to read it.

Here's another snippet... how Goldman Sachs got paid by AIG, having placed 'bets' (shorted) with AIG that the same junk and toxic investments they were selling to clients would tank

It was a brilliant move. When a company like AIG is about to die, it isn't supposed to hand over big hunks of assets to a single creditor like Goldman; it's supposed to equitably distribute whatever assets it has left among all its creditors. Had AIG gone bankrupt, Goldman would have likely lost much of the $5.9 billion that it pocketed as collateral. "Any bankruptcy court that saw those collateral payments would have declined that transaction as a fraudulent conveyance," says Barry Ritholtz, the author of Bailout Nation. Instead, Goldman and the other counterparties got their money out in advance — putting a torch to what was left of AIG. Fans of the movie Goodfellas will recall Henry Hill and Tommy DeVito taking the same approach to the Bamboo Lounge nightclub they'd been gouging. Roll the Ray Liotta narration: "Finally, when there's nothing left, when you can't borrow another buck . . . you bust the joint out. You light a match."

And why not? After all, according to the terms of the bailout deal struck when AIG was taken over by the state in September 2008, Goldman was paid 100 cents on the dollar on an additional $12.9 billion it was owed by AIG — again, money it almost certainly would not have seen a fraction of had AIG proceeded to a normal bankruptcy. Along with the collateral it pocketed, that's $19 billion in pure cash that Goldman would not have "earned" without massive state intervention. How's that $13.4 billion in 2009 profits looking now? And that doesn't even include the direct bailouts of Goldman Sachs and other big banks, which began in earnest after the collapse of AIG.

or their profiting from applying for & having been given 'bank holding company' status by the fed JUST AFTER their bailout.

Less than a week after the AIG bailout, Goldman and another investment bank, Morgan Stanley, applied for, and received, federal permission to become bank holding companies — a move that would make them eligible for much greater federal support. The stock prices of both firms were cratering, and there was talk that either or both might go the way of Lehman Brothers, another once-mighty investment bank that just a week earlier had disappeared from the face of the earth under the weight of its toxic assets. By law, a five-day waiting period was required for such a conversion — but the two banks got them overnight, with final approval actually coming only five days after the AIG bailout.

Why did they need those federal bank charters? This question is the key to understanding the entire bailout era — because this Dollar Store scam was the big one. Institutions that were, in reality, high-risk gambling houses were allowed to masquerade as conservative commercial banks. As a result of this new designation, they were given access to a virtually endless tap of "free money" by unsuspecting taxpayers. The $10 billion that Goldman received under the better-known TARP bailout was chump change in comparison to the smorgasbord of direct and indirect aid it qualified for as a commercial bank.

When Goldman Sachs and Morgan Stanley got their federal bank charters, they joined Bank of America, Citigroup, J.P. Morgan Chase and the other banking titans who could go to the Fed and borrow massive amounts of money at interest rates that, thanks to the aggressive rate-cutting policies of Fed chief Ben Bernanke during the crisis, soon sank to zero percent. The ability to go to the Fed and borrow big at next to no interest was what saved Goldman, Morgan Stanley and other banks from death in the fall of 2008. "They had no other way to raise capital at that moment, meaning they were on the brink of insolvency," says Nomi Prins, a former managing director at Goldman Sachs. "The Fed was the only shot."

There's tons more in the article... Rivetting reading, but a real teeth gnasher too

This Matt Talibi (sp?) guy is an idiot/shill/paid for.

Go back and read his article on HFT like months ago when that was "what brought the market down". It is chalked full of lies,misconceptions, misinformation. I wouldn't trust anything he says after that. You only get one chance with your word.

reply to post by GreenBicMan


Yep, and you lost yours a long time ago.

The article is good, well-written, and factual.

Wall Street doesn't make anything but scams anymore.

reply to post by GreenBicMan


I can only go by the Rolling Stone article .... What he describes as having happened (particularly the Goldman Sachs bit) matches a lolt of what's been reported elsewhere, including a few very good threads here on ATS.

The guy might be a complete plonker, an idiot, eat children for breakfast, steal from his own mother, but the events as outlined in his article are facts. Perhaps there might be other ways of interpreting them, different ways of looking at the actions of the big banks since the last meltdown..... but

somehow i doubt it

reply to post by apacheman


What are you talking about?

___

If someone produces work that is sensationalized and you know this, you willingly follow still? That makes you the sheep not me my friend.

Also you will have to point out the factual information in the article.

I read the posted paragraphs in this thread and it's all 100% opinionated. I will skim the rest.

reply to post by GreenBicMan


I've read a lot of your posts, and sorry to say, they are mostly drivel unlit by anything remotely resembling real analysis, generaly finance-speak justifying the corrupt behavior that passes for investing in the stock market, and blaming the victims of it for being lazy or stupid without acknowledging that they are the victims of cons run by the banks and Wall Street, so I now tend to ignore you mostly.

reply to post by apacheman


Yeah, it's tough to actually research things yourself and not just follow the herd. Perhaps if you took the time to do this you would come up with a lot of the same conclusions.

Please, start pointing out all the factual information in this article. I'm really not seeing anything. Or you could perhaps link some information that I have posted previously to show myself in your negative light.

Or you could just ignore me.

reply to post by Dagar


Brilliant article. Funny, informative. Excellent find. And the explanation by way of grifter vocabulary is, well, really special.

One giant Ponzi scam on top of another, huh? Free market? ...Not.

...Had to stop reading due to digestive response, but bookmarked the article. Will get back to it later.

Thanks.

reply to post by soficrow


Thanks for the reply... Your reaction to the article matches my own pretty much.

I thought the 'grifter' references were hilarious too... It was weird though, one of those rare times when I was actually laughing while getting increasingly annoyed by what I was reading, and what these people get away with.

Cheers

reply to post by GreenBicMan


Instead of such vague criticism why don't you point out where you think the article is lying, misrepresenting, non-factual, or just plain wrong.

All you seem to be doing is bandying aabout vague criticisms based in the fact you appear to have a dislike of the author.

Lets have some specifics, I'm all ears

reply to post by Dagar


I think you can tell opinion from fact. Half this article are one line zingers that really aren't that great of analogies either. Most of what I have read is all "assumptions" on what he possibly thought could have happened, but there is no evidence of that in reality.

Everything that I have read (not all of it, big article) is based on this assumption that Goldman would be dead if not for US Gov and then GS also has ran all over us at the same time (while needing more of our money ?)

I am pretty sure he is paid (editors etc.) some money to fabricate and sensationalize material.

Does anyone even know what the US Gov made off Goldman when they repaid TARP? Do you know Goldman in no way needed TARP assistance? I'm not being a bitch but I'm not going to go through this whole article line by line etc.