Comments on: Facebook doesn’t care where Goldman gets its funds http://blogs.reuters.com/felix-salmon/2011/01/06/facebook-doesnt-care-where-goldman-gets-its-funds/ A slice of lime in the soda Thu, 23 May 2013 23:51:59 +0000 hourly 1 http://wordpress.org/?v=3.4.2 By: dWj http://blogs.reuters.com/felix-salmon/2011/01/06/facebook-doesnt-care-where-goldman-gets-its-funds/comment-page-1/#comment-22766 dWj Thu, 06 Jan 2011 17:58:27 +0000 http://blogs.reuters.com/felix-salmon/?p=6833#comment-22766 If the purpose of the Volcker rule is to impede a highly-leveraged entity with a Federal Reserve backstop making risky investments, it would seem to matter enormously to regulators where the money came from. It appears here that it matters to GSAM as well; GSAM apparently didn't feel under sufficient pressure from the bank itself to make the investment. And naturally Facebook doesn't care who the ultimate investors are; it doesn't affect them. I guess it hadn't occurred to me that the purpose of the Volcker rule might be to put fed-regulated entities at a competitive disadvantage; to the extent it did that, I figured it was epiphenomenal, and not the ultimate purpose. Perhaps I misunderstood. If the purpose of the Volcker rule is to impede a highly-leveraged entity with a Federal Reserve backstop making risky investments, it would seem to matter enormously to regulators where the money came from. It appears here that it matters to GSAM as well; GSAM apparently didn’t feel under sufficient pressure from the bank itself to make the investment. And naturally Facebook doesn’t care who the ultimate investors are; it doesn’t affect them.

I guess it hadn’t occurred to me that the purpose of the Volcker rule might be to put fed-regulated entities at a competitive disadvantage; to the extent it did that, I figured it was epiphenomenal, and not the ultimate purpose. Perhaps I misunderstood.

]]> By: Danny_Black http://blogs.reuters.com/felix-salmon/2011/01/06/facebook-doesnt-care-where-goldman-gets-its-funds/comment-page-1/#comment-22743 Danny_Black Thu, 06 Jan 2011 08:23:27 +0000 http://blogs.reuters.com/felix-salmon/?p=6833#comment-22743 Bear Stearns CHOSE to bailout the creditors of their fund - which was not a subsidary - because it was "the right thing to do". They didn't have to unlike the SIVs Citi had. To be clear the High Yield fund were completely separate legal entities from BSAM which was the ***management*** company for those funds. The ***funds*** were not subsidaries and have no recourse to BSAM or BSC, nor does BSC or BSAM have recourse to them. Bear Stearns CHOSE to bailout the creditors of their fund – which was not a subsidary – because it was “the right thing to do”. They didn’t have to unlike the SIVs Citi had.

To be clear the High Yield fund were completely separate legal entities from BSAM which was the ***management*** company for those funds. The ***funds*** were not subsidaries and have no recourse to BSAM or BSC, nor does BSC or BSAM have recourse to them.

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