Can someone express this as a percentage of the claims themselves? The $5B figure is meaningless without knowing the size of Goldman's loot.
[deleted]
Goldman Sachs Will Pay $5B to Settle Financial-Crisis Claims
11–20 of 118 posts
Re: Goldman Sachs Will Pay $5B to Settle Financial-Crisis Claims
#12As a quick refresher, these guys sold CDOs that they knew weren't priced correctly, obfuscated the mispricing, and then profited on short positions against the securities. Took 7 years to settle for being straight up crooks. Still the Wild West out there.
There should really be some way to punish the individuals responsible, even just a fine comparable to the bonuses they made, rather than just having their employer pay compensation while those responsible continue to get richer.
Re: Goldman Sachs Will Pay $5B to Settle Financial-Crisis Claims
#13I guess I'm cynical but I'm worried that Goldman's takeaway here is to make the financial products, transactions, and their position more complex/opaque in the future.
That's not being cynical. When a fine is less than your profits for breaking the law you are into a sound business model.
Suppose that when you caught a thief the sentence were to return 60% of whatever he has stolen, nothing else. The result is quite obvious. Even if it where 100%, it will still be a good business as you will get away with all the money when you are not caught.
Lloyd said it quite clear "We are pleased to have reached an agreement in principle to resolve these matters,". Of course they are pleased! We are not.
Re: Goldman Sachs Will Pay $5B to Settle Financial-Crisis Claims
#14So a quick google search turned up this:
"Overall, Goldman Sachs received a $12.9 billion payout from the government's bailout of AIG, which was at one time the world's largest insurance company." [1]
Now, these might be related, but [not] identical - or indeed not connected - but on the face of it it seems rather outrageous... perhaps someone who's a bit more up on the details can comment?
[1] http://usatoday30.usatoday.com/money/industries/banking/2010...
Re: Goldman Sachs Will Pay $5B to Settle Financial-Crisis Claims
#15For context, that's about 3 months' profits. Not nothing, but not much compared to the damage they caused.
But not all the profits are gained illegally (a priori). Of course you want the punishment to fit the crime, so you qualify how much money they made off of the crime itself and charge an order of magnitude more than that.
Convict them of 4 similar crimes and you wipe out a year's profit! I don't think GS takes a 25% drop in profits lightly.
Now in this case it sounds like they caused a lot of damage for what they did.
Re: Goldman Sachs Will Pay $5B to Settle Financial-Crisis Claims
#16I mean, we gave them loans, not free money, right? The American people profited in a literal sense on the bailout.
Re: Goldman Sachs Will Pay $5B to Settle Financial-Crisis Claims
#17So a quick google search turned up this: "Overall, Goldman Sachs received a $12.9 billion payout from the government's bailout of AIG, which was at one time the world's largest insurance company." [1] Now, these might be related, but [not] identical - or indeed not connected - but on the face of it it seems rather outrageous... perhaps someone who's a bit more up on the details can comment? [1] http://usatoday30.usat…
When the government bailed out AIG, everyone who was owed money by AIG got paid. Is there more to the story?
We seem to revisit the crisis on HN. Someone should do a write up. We seem to rehash a lot of this. Basically , history just repeating itself. TARP, for example, being a loan:
https://en.m.wikipedia.org/wiki/Troubled_Asset_Relief_Progra...
Re: Goldman Sachs Will Pay $5B to Settle Financial-Crisis Claims
#18As a quick refresher, these guys sold CDOs that they knew weren't priced correctly, obfuscated the mispricing, and then profited on short positions against the securities. Took 7 years to settle for being straight up crooks. Still the Wild West out there.
> that they knew weren't priced correctly
Things are priced at what they will sell for. It's more that they were hiding information about the risk (which of course would have drastically lowered the value and the price people would be willing to pay). I think the difference is significant, however.
Re: Goldman Sachs Will Pay $5B to Settle Financial-Crisis Claims
#19I mean, we gave them loans, not free money, right? The American people profited in a literal sense on the bailout.
Sure, it was a loan--that no other financial institution could have dared to make, thereby making the expected interest rate on the open market for such a loan much higher than whatever accounting tricks are used today to determine that the government turned a "profit." Furthermore, the loans involved the government purchasing financial instruments that were basically impossible to value fairly [1], because much of it was junk at the time, and so the Treasury probably overpaid for them [2]. Finally, as far as using the money for long-lasting economic change, the loans were given with basically no strings attached, so banks that "qualified" for TARP (does anybody seriously believe that the Treasury selected participants in a neutral, transparent manner?) could use the money to swallow up smaller institutions for a bargain [3], basically subsidizing more of the bad behavior that led to the collapse in the first place.
[1] http://web.archive.org/web/20090110184334/http://www.uiowa.e...
[2] http://web.archive.org/web/20090207100935/http://cop.senate....
Re: Goldman Sachs Will Pay $5B to Settle Financial-Crisis Claims
#20As a quick refresher, these guys sold CDOs that they knew weren't priced correctly, obfuscated the mispricing, and then profited on short positions against the securities. Took 7 years to settle for being straight up crooks. Still the Wild West out there.
> that they knew weren't priced correctly Things are priced at what they will sell for. It's more that they were hiding information about the risk (which of course would have drastically lowered the value and the price people would be willing to pay). I think the difference is significant, however.
I have a box for sale labeled AAA. Price $5. Guaranteed to contain $6. Email me for details.