Commentaries
Now raising intellectual capital
from Rolfe Winkler:
Grist for Goldman conspiracy theorists
From Yves over at NakedCapitalism:
A former managing director at monolines Ambac and FGIC wonders why AIG was bailed out but the monolines weren't. (He admits to bias, so take this with a grain of salt.)
...the [AIG] bailout was prompted by fear mongering and deliberate strategies and manipulation on the part of Goldman and a few select others, to make sure that AIG would be bailed out to protect their trades in shorting ABS CDOs.
I believe that John Paulson benefited from this bailout, on his $5 billon or so of ABS CDOs with AIG. But not as much as Goldman benefited themselves, via Abacus and, perhaps, other deals.
AIG, Goldman and ABS CDOs were tied together at the center of the crisis. From Goldman’s perspective, all of the other participants were secondary – they had no exposure to the monolines and they were probably hedged against the other banks. The only loose end was the collateral posted by AIG.
CIT timing not the greatest
Though, I’m not sure if it would have been better for the talks between CIT and the government to break down last week either. The pairing of almost certain bankruptcy of the little guy lender with the blow-out earnings of Wall Street giants, JP Morgan and Goldman Sachs, makes a strong argument for smaller financial institutions to beef up their operations so they, too, can be too big to fail.
I hope Geithner and Bernanke are preparing their defense for the populist backlash.
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The Wall
