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How The Fed Gave Goldman Millions In Exchange For Defaulted Bond Collateral

Tyler Durden's picture


While it is no surprise that the day after Lehman failed, every single bank scrambled to the Fed to soak up any and all available liquidity after confidence in the entire ponzi collapsed, what is a little surprising is that of the 6 banks that came running to papa Ben, and specifically his Primary Dealer Credit Facility, recently upgraded, or rather, downgraded to accept collateral of any type, two banks (in addition to Lehman of course which at this point was bankrupt and was forced to hand over everything to triparty clearer JPM), had the temerity to pledge bonds that had defaulted (i.e. had a rating of D). As in bankrupt, and pretty much worthless. Now that the Fed would accept Defaulted bonds as collateral: or "assets" that have no value whatsoever is a different story. What is notable is that the two banks that did so were not the crappy banks such as Citi or Morgan Stanley, but the two defined as best of breed: Goldman Sachs and JP Morgan. It is probably best left to the now defunct FCIC to determine if this disclosure is something that should also be pursued in addition to recent disclosure that Gary Cohn may have perjured himself by not disclosing truthfully his bank's discount window participation. However, we can't help but be amused by the fact that of all banks, the ironclad Goldman and JPM would be the only ones in addition to bankrupt Lehman to resort to something so low.

PDCF collateral as of September 15, 2008.

And further analysis indicates that a few weeks later, this practice became pervasive, with virtually every banker pledging defaulted bonds in exchange for money good cash with which to pretend these banks were doing just fine (not to mention that $71.7 billion in collapsing equities represented nearly half the total collateral of $164.3 billion pledged to receive $155 billion in cash.)

At some point people will inquire, perhaps not in the most peaceful of terms, just why this travesty of fiduciary responsibility was happening when it happened. But not yet. And certainly not while the Chairman continues to successfully levitate the market singlehandedly.


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Fri, 04/01/2011 - 16:15 | 1126376 hedgeless_horseman
hedgeless_horseman's picture

...not disclosing truthfully his bank's discount window participation...

Gary should have known better.  You suck just one cock, and you are forever a cocksucker. 

Fri, 04/01/2011 - 16:31 | 1126469 Bastiat
Bastiat's picture

Is it that good?

Fri, 04/01/2011 - 16:35 | 1126484 hedgeless_horseman
hedgeless_horseman's picture

It is a truth of nomenclature, not a personal experience.

Fri, 04/01/2011 - 16:43 | 1126534 Fish Gone Bad
Fish Gone Bad's picture

So just like Tollbooth Willie (, Goldman is just another bunch of pathetic losers.

Sat, 04/02/2011 - 03:21 | 1127566 Harlequin001
Harlequin001's picture

How can GS have zero loss trading days in a quarter when their investment calls are so bad...

Answer: go see uncle Ben and more so if he's a bit busy trying to stuff banks with money so they don't fail.

None of these profits are real. It is taxpayers money.

Fri, 04/01/2011 - 20:18 | 1127050 Bastiat
Bastiat's picture

Sorry, couldn't resist.

Sat, 04/02/2011 - 14:41 | 1128196 In Fed We Trust
In Fed We Trust's picture

Here is the skinny.

The money leant to these foriegn banks was enough to have saved Lehman.

The money leant to GS and JP for D bonds, also was enough to have saved Lehman.

Hank Paulson could have saved Lehman, but instead saved everyone else.

As if they didn't compute, that letting Lehman fail, would cause a crash.

They had to have known that fact, yet they all wanted Lehman to fail.

Proof: They wanted/planned/ profited from the crash.

Non dare call it conspiracy. Just smart Investment bankers.

Sat, 04/02/2011 - 14:50 | 1128209 In Fed We Trust
In Fed We Trust's picture

In addition, Goldman Sachs, and it's client Paulson(Hedge Fund) where the only ones able to spot the black swan better known as sub prime.

Each to the tune of a $10 billion profit betting against subprime. 

Whey Hank Paulson, didn't see the same black swan as he was just CEO of Goldman.

Probably because he had become Treasary under Bush.

Why didn't Goldman call Hank Paulson and say "we see a black swan on the horizon?"

I guess because they wanted the $10 billion apiece.

Could/should they have known, that their collective bets were enough to turn the market south?

No worry, because Goldman would get another $10 billion from TARP after Hank Paulson stopped crying about how the markets were getting spooked!

So Goldman was smarter than everyone else in spotting the subprime problem, but not smart enough to know that letting Lehman failure would tank the market, and also the sheer size of their bet against subprime was enough to get the markets to tank.


Sat, 04/02/2011 - 14:59 | 1128226 In Fed We Trust
In Fed We Trust's picture

In the circus better known as teh US Judical system, an Honorable Judge refered to the crime as "the BIG short" and scolded the head of Goldman for 5 minutes about collasping the economy.

Then, the honorable Judge fined Goldman $500 million for the fraud.

They made $10 billion on the fraud. Fine is half a billion.

Cost of doing business, i mean fraud in America.

5% is the cost to do fraud. Not to shabby!

Sat, 04/02/2011 - 15:05 | 1128240 In Fed We Trust
In Fed We Trust's picture

Not to dig up the past, but the feds been muggin on me lately, so I be muggin back!

full the full skinny on Goldman   what i call Conspiracy 101 or macro   what I call conspiracy 102 or the MICROS


Fri, 04/01/2011 - 16:12 | 1126378 LostWages
LostWages's picture

Lloyd gave a pinky promise he would pay it back. 

All good....nothing to see here.

Fri, 04/01/2011 - 16:10 | 1126379 apberusdisvet
apberusdisvet's picture

Under the rule of law, Bernanke would have already been given a choice as to preferred method of suicide; swan dive from a helicopter over the Grand Canyon or exile at Fukishima.

Fri, 04/01/2011 - 18:22 | 1126793 unununium
unununium's picture

It is theft.  Actually, it is worse than theft.  This is treason.

Sat, 04/02/2011 - 06:24 | 1127616 Harlequin001
Harlequin001's picture

I'm not convinced there is a problem here at all...

When you look at how money in the US is created it usually begins with Congress demanding money from the Treasury.

The Treasury creates a T Bill for say $1 billion which it takes down to the Fed. The Fed writes itself a check for cash to pay for it and accepts the T Bill in exchange. The Treasury can now give the cash to Congress to spend into the economy.

Perhaps my understanding is wrong here, so any pointers are gracefully accepted.

During the converse, where the Fed wishes to remove liquidity from the economy the Fed takes said T Bill back to the Treasury and asks for its cash back. The Treasury would normally sell the T Bill into the market, the proceeds of which it then pays back to the Fed. This assumes that the money supply remains constant with the Fed acting as a sponge.

Now lets suppose that the Fed chose to reduce the money supply it would simply shred the currency being returned from the sale, the Treasury would shred the T Bill and the Fed's balance sheet would once again read zero. In the converse to how money is created from thin air it is returned to thin air i.e. there is no loser of money.

Consider this. Supposing the Fed wished to dispose of its defaulted CMBS which was worth actually zero but has a face value and was being held on the Feds balance sheet at the value of $1 billion. It could simply take said CMBS to the Treasury and ask for the money. The Treasury could  agree to accept the CMBS at full face in return for $1 billion in cash, which it pays to the Fed.The Treasury then shreds the CMBS and the Fed shreds the currency.

Of course the Treasury would then need to replace the currency by offering the Fed another brand new T Bill, which the Fed then writes itself a check against and takes as collateral on its balance sheet.

Et voila, the Fed just disposed of $1 billion of CMBS losses to the same people it takes its money from. No one. It simply has to wait for the collateral to expire on the Fed's balance sheet because it can't return brand new T Bills to the banks if it took defaulted crap in its place.

ergo the taxpayer is not utimately funding this or any other bailout.

Comments please?


Fri, 04/01/2011 - 18:33 | 1126831 falak pema
falak pema's picture

maybe he likes sizzling saunas...swan dive is truly black swan...if no golden parachute...all these guys have golden parachutes...hidden inside their coats or wallets...

Fri, 04/01/2011 - 16:12 | 1126380 Alcoholic Nativ...
Alcoholic Native American's picture

Sounds fair.

Fri, 04/01/2011 - 16:11 | 1126384 Sudden Debt
Sudden Debt's picture

I wonder if I would be able to collect my losses from those days if I wrote Benny a letter asking for my money back... most where bank loses, so I think it could work...

Fri, 04/01/2011 - 16:15 | 1126395 hugovanderbubble
hugovanderbubble's picture

In my humble house...this is " help the big ones to avoid failure..."---- Thats free market ...that competitive?


And most of this banks (executives) has taken bonus during 08-10...........THats ethical? YES of course¡¡¡¡ Call Daddy Government and give free money to solve problems...




Thanks for posting, and whole zH readers have a nice Wkend

Fri, 04/01/2011 - 16:15 | 1126401 Milton Waddams
Milton Waddams's picture

"Your kids have any baseball cards maybe? Used chewing gum? a paper clip? Anything. Just mark the value to internal mndels *wink* and bring it down to the window. Tell'em Ben sent you."

Fri, 04/01/2011 - 16:17 | 1126403 Cursive
Cursive's picture

Where the fuck os A99? Bring Dimon and Blankfien to their knees.

Fri, 04/01/2011 - 16:18 | 1126405 RobotTrader
RobotTrader's picture

Another huge day for stock bulls.

Consumer names like Under Armor continue to outperform.

Same thing for REITS

Casino stocks going wild:

Fri, 04/01/2011 - 16:39 | 1126460 lieutenantjohnchard
lieutenantjohnchard's picture

and of course you made nothing off these investments. your widows and orphans portfolio of mo and vz were down for the day. lol, as you would bray.

meanwhile, those metals foiled you again.

the old scroomer as you call him, gentleman jim sinclair, sends warm regards, and hopes your view of the jam packed los angeles freeway from your 3rd floor apartment window is nice today.

Fri, 04/01/2011 - 16:51 | 1126551 bania
bania's picture

a lot of folks here seem to get their backs up every time Robot posts.  However he does highlight an extremely important point that the system has much more resilience than you'd expect - kind of in the 'staying irrational longer than you can stay solvent' way.  Whether or not the charts he cherry picks represent his investments is irrelevant.  The numbers in those charts don't lie, and there has been a tremendous surge in stocks in general, and certain stocks in particular, these past few years.  To block this reality out of your investment philosophy because you think a market isn't right or fair or right, is a huge opportunity lost.

Everytime I see a Robot post is a reminder the 'incumbent' system isn't going to be replaced without a long, drawn-out fight.

PS. i forgot to add... Robot, please include the ladies with your posts!

Fri, 04/01/2011 - 17:19 | 1126637 lieutenantjohnchard
lieutenantjohnchard's picture

but do you need a robot post to tell you what you already know?

robot grates because he talks out of both sides of his mouth, and then claims he was right all along. the list is too long to recite at this point.

as i've said before. if you are new to zh please research his back posts for yourself. at that point you will know exactly what i'm talking about.

Sat, 04/02/2011 - 04:54 | 1127588 Harlequin001
Harlequin001's picture

bania, whilst  agree with your sentiments the fact remains that if you don't understand a market there is no way you can get out ahead of the field. You exist to be stripped of your assets which is the ultimate result for Robot.

Bottom line is that with the gains I have made already in PM's I am not interested in short term moves in socks, or currencies or anything else for that matter.  I have no need of them.

As governments the world over will come to realise, precious metals investors have no need of fake markets because their assets cannot be devalued. The more money governments create to manipulate markets in the short term is fodder for the longer term trend. Neither they nor Robot can win.

or perhaps I should say that gvernments can win because they can simply take it from you, but Robot is on a no win ticket, because he can't.

Fri, 04/01/2011 - 17:32 | 1126672 JohnG
JohnG's picture


How the hell does this relate to the topic of this posting?

Fri, 04/01/2011 - 16:20 | 1126409 strannick
strannick's picture

I think JPM and GS should be flying used-car multi-colored pendant flags outside their Wall St. digs with 'Honest Jims' and 'Lloyd's for Less' flourescent blinking signs. They should be dressed in plaid, so people dont misconstrue the true motives of their businesses based on the fancy digs and threads.

Sat, 04/02/2011 - 04:56 | 1127590 Harlequin001
Harlequin001's picture

how about just tarred and feathered...

Sat, 04/02/2011 - 09:51 | 1127687 Widowmaker
Widowmaker's picture

How about dragged behind a truck in their pinstripes.

Lying, cheating, and fucking the taxpayer with their own congress - the Goldman Morgan way.

The rest of us called this with the record bonus bonanza bullshit.


When I [ever] cross paths with any NY GS JPM bankers you will get a complimentary broken face -- and you will never see it coming.  Speaking of, where is that spineless fuck Chemba who is always defending GS's pillaging?  I'd love to meet you first, pussy.

Fri, 04/01/2011 - 16:18 | 1126410 Cdad
Cdad's picture

" will the MSM keep Tyler Durden's representatives from asking questions when the Chair Satan has his first press conference?  Report.  

Computer...extrapolate why is hull integrity breached in Cdad's skull?"

Hello, giant martini [with your futures rising].  

Fri, 04/01/2011 - 16:20 | 1126418 MsCreant
MsCreant's picture

I remember at one point no shorts were permitted on like 18 or 20 banks or so. Wonder how that hooks up with this?

If you were short, and the Bernank bailed them out and you lost your money, well, just sayin'...

Fri, 04/01/2011 - 16:25 | 1126445 Milton Waddams
Milton Waddams's picture

799 banks.  And perfectly timed too- on an option expiration day.

Fri, 04/01/2011 - 16:35 | 1126496 Rick64
Rick64's picture

How many TBTFs made money off this inside info?

Fri, 04/01/2011 - 16:51 | 1126554 DaveyJones
DaveyJones's picture

Only 1 area of law is practiced here anymore, criminal defense

Fri, 04/01/2011 - 21:36 | 1127180 Hephasteus
Hephasteus's picture


Sat, 04/02/2011 - 04:59 | 1127591 Harlequin001
Harlequin001's picture

plea bargaining, the law doesn't even get that far...

Fri, 04/01/2011 - 17:14 | 1126629 lizzy36
lizzy36's picture

2x in 2008.

1st time was in July 2008. That is the 18 -20 number.

2nd time in September 2008. That is the 800 number.

The interesting thing about the DW 25,000 page dump is that one can see in real time how things were spinning out of control. Then one superimposes official rhetoric and non action by regulators (paulson/geithner/bernanke, to name 3) and one knows for sure that there will NEVER be a perp walk associated with this mess. Regulators (mostly promoted or in the case of politicians on the take in their current jobs) are as culpable as any financial actor.

Odd that anyone honestly expects this time will be different.

Sat, 04/02/2011 - 03:02 | 1127556 Yen Cross
Yen Cross's picture

Don't Fed me. What is your point?

Fri, 04/01/2011 - 16:23 | 1126425 whatz that smell
whatz that smell's picture

feel sorry for the pigmen, bitchez. maybe a blind date with roboTrader's mom will cheer them up.

praise be the bernank! may he favor roboTraders stock charts forever!

Fri, 04/01/2011 - 16:25 | 1126446 Quinvarius
Quinvarius's picture

Robot Trader's mom is a selfish lover. 

Fri, 04/01/2011 - 16:21 | 1126432 agrotera
agrotera's picture

The privately owned Federal Reserve system included supported expenses of most highly acclaimed economic chairs in the country--in addition to droves of another machine of academics to "support" the idea that what they do and have always done is all for our own good and for the good of the order and the least harmful, etcetera etcetera...this is what i call a monumental (since the fall of 2008 when i saw the whole thing in operation implemented by the tag team leaders HANK &BEN)



All the while, the Fed balance sheet has tripled, and their 6% on 1% of all reserve "expense" charge just gets bigger and bigger, and all those on their payroll as support of this GROUPTHINKTHINKTANK just get busier and busier justifying the massive gutting of AMERICA...

Fri, 04/01/2011 - 16:23 | 1126434 RobotTrader
RobotTrader's picture

My former employer has been acting very strong.

They are a Inland Empire bank, still choking on massive CRE exposure.

They just sold their biggest non-performing loan to its largest borrower to some "enterprising speculator".

The company has paid a cash dividend for 86 consecutive quarters, and will probably pay dividends every quarter for the rest of my life.  Unless they get bought out.

Fri, 04/01/2011 - 16:33 | 1126480 lieutenantjohnchard
lieutenantjohnchard's picture

i guess you'll need those dividends since capital appreciation of your investments is lacking. lol. so sorry your portfolio was down today. but you can still buy boxed wine with your dividends. $2 buck chuck might be appropriately priced for your dividend oriented portfolio of widows and orphans stocks.

then again you're welcome to live vicariously off the gains of real investors. 

Fri, 04/01/2011 - 16:26 | 1126441 knukles
knukles's picture

Let's see....
First it was loans, those loans.. "Oh, we don't have any record of those loans."  Remember?  Fed book entried the money, but no records....  LOL  Not born last night.  What about Fed wire numbers?  Assholes.

Then it FOIA request was fought tooth and nail for those loans that didn't exist.  Ah-hemm.  

Then they had to release the details of those loans... which they did in redacted form on a bazillion discs, technology which nobody has used in years.

And did not release the details of the collateral.  Because there was not enough fucking eligible to be Fed wired collateral in the world to securitize all those loans.... so some of it had to be bogus (as in bullshit, bad, inferior, lousy, not good) collateral.  As I've said for days, right?


Now, if a bank loans money against shit collateral, then perhaps they shouldn't be lending money at all.
In fact,  maybe they ought not be creating moneys let alone lending it, as another no no. 

And maybe they shouldn't have been caught lying (er sorry, obfuscating or just kidding around) about it.... 
Someting about a Credibility Trap

If I were a really serious politician, I'd sure as hell be lining up my populist guns (you know, against the banks, et al) to start scathing the Fed.  Not that it's the right or wrong thing to do, and not that it'll get anywhere.... as in don't bite hands that faciltiate feeding. Just gonna be the next vote garnering trend in DC.


Fri, 04/01/2011 - 16:55 | 1126562 Cdad
Cdad's picture

If I were a really serious politician, I'd sure as hell be lining up my populist guns (you know, against the banks, et al) to start scathing the Fed.

Exactly.  This one needs aggressive forwarding.  As DC prepares to commit fiscal suicide for the entire  nation, the time to write letters is now, anyway.

It continues to be the case that we, as a nation, cannot heal from this economic crisis until these banks are broken up, the vast majority of these fellows released from their jobs, the system purged of leverage, and integrity of banking is restored by revealing clean books.  It is the simply fact about capital formation.  Capital cannot and will not form in a banking industry this corrupt.  

So as Bernanke continues to print dollars via QE2 and stuffs them into preferred banks, he is specifically delaying our recovery. How many Americans are accumulating gold and silver?  How many no longer trust the banks?  How many have left the stock market?  How many are selling bond because there is not enough of a return on them to justify the risk?  

HOW LONG IS BEN BERNANKE GOING TO KEEP THE PRETENSE OF ECONOMIC RECOVERY UP IN THE AIR by printing and destroying our currency to fill the void where real capital once was?

Getting the word out on this specific nonsense will only help the cause of ridding the nation of this bloated  and corrupt financial services industry.

Fri, 04/01/2011 - 17:14 | 1126623 bbaez
bbaez's picture

How long?


Until his buddies can no longer make money from it....

Fri, 04/01/2011 - 16:25 | 1126449 InconvenientCou...
InconvenientCounterParty's picture

shame has no place in Capitalism.

Fri, 04/01/2011 - 16:36 | 1126503 NotApplicable
NotApplicable's picture

Why do you keep referring to this as capitalism?

Are you really that thick? Or is this just a troll attempt?

Oh wait, you used a capital C, that means something...

Fri, 04/01/2011 - 19:00 | 1126900 Natasha Fatale
Natasha Fatale's picture

Using a 'K' would be most appropriate

Sat, 04/02/2011 - 03:00 | 1127553 Yen Cross
Yen Cross's picture

Step it up young lady! I'll walk down any dark road with you! Stay SHARP!

Fri, 04/01/2011 - 16:27 | 1126451 A Man without Q...
A Man without Qualities's picture

One question here - did they also provide a back to back CDS contract to bring the package back to par PROVIDED THE TREASURY BAILED OUT AIG?

Of course the CDS contract with AIG had a collateral agreement, so the banks had some cash from the position already.

My guess, and it isn't really a guess, you wouldn't believe the crap that was going on.

Fri, 04/01/2011 - 16:28 | 1126455 emsolý
emsolý's picture

All roads lead to Rome. All assets lead to Papa Ben.

Also: Goldman is doing God's work, and God loves all his children, even the defaulted ones.

Fri, 04/01/2011 - 16:28 | 1126457 mister_x
mister_x's picture

What is the source for this? Has the "public" data dump been made available to us plebs yet?

Fri, 04/01/2011 - 16:29 | 1126471 Waterfallsparkles
Waterfallsparkles's picture

So, the American Taxpayers got stuck with Bonds that had already defaulted.  Yet, the Banks probably got face value on the Tax payer dime.

This is irrepressible.

Sat, 04/02/2011 - 09:57 | 1127719 Widowmaker
Widowmaker's picture

Irrepressible, spelled:

M-I-S-S-I-O-N   A-C-C-O-M-P-L-I-S-H-E-D

Don't think for a second that that the ghost of Prescott Bush isn't knee deep in profit during these times.

Fri, 04/01/2011 - 16:32 | 1126472 gridlocked
gridlocked's picture

I've always wondered what this was (below). I remember the press releases on this the week Lehman went under but it made no sense to me.


JPMorgan Chase & Co. gave $138 billion this week in Federal Reserve-backed advances to the broker dealer unit of Lehman Brothers Holdings Inc. to settle Lehman trades and keep financial markets stable amid the biggest bankruptcy in history, according to a court filing.

Fri, 04/01/2011 - 17:00 | 1126585 willien1derland
willien1derland's picture

Great post GL..however, I am fixated on the verb GAVE -

JPMorgan Chase & Co. GAVE $138 billion this week in Federal Reserve-backed advances to the broker dealer unit of Lehman Brothers Holdings Inc. to settle Lehman trades and keep financial markets stable amid the biggest bankruptcy in history, according to a court filing.

If I had only known, I would have lied my a$$ off instituting any version of REPO 105 I could illegitimately conceive of & not do ANY PRISON TIME?!

USD $138 Billion is TWICE as much as Bernie Madoff was charged with - In the quote from the Movie Johnny-5 - "I am standing here besides myself!" 


Fri, 04/01/2011 - 16:33 | 1126477 gwar5
gwar5's picture

As the Stomach Turns....

The European banks gave us plenty of bad paper for Bernanky bucks too, didn't they? Anbody know if we (taxpayers) are still holding it and going to eat it?

Seems everything possible to make the USD unsalvageable is being done. QE is a purposeful one way trip for the Fed.


Fri, 04/01/2011 - 16:33 | 1126487 bania
bania's picture

who was it who said something about swimming naked and an ebbing tide...?

Fri, 04/01/2011 - 16:34 | 1126491 jal
jal's picture


The fed has released its data of what they did to avoid a financial meltdown.

Here is my quick impression.

We find out that banks and everyone’s dog were given access to newly printed money to meet their cash flow. Some put up collateral, some put up dubious collateral or no collateral.

It did not matter because all collateral were impaired and could not be liquidated to raise cash.

It was not just real estate collateral that was bad. It was the stock market and everything else.

Funds had to be found to pay off the people that were screaming for cash to meet their cash out flow.

This is where the fed came in and printed money to meet those demands.

Those dogs that were doing leveraged, printing money, making loans, as part of their business model were finding that their income streams were drying up. It did not matter if they were leveraged 10, 20, 40, or 80 times. I would think that those leveraged at 80 times were feeling it first and faster than those leveraged at lower numbers.


The only solution was to go and get new dollar bills from the fed for up to 90 days and pray that their cash flow would restart and that they would be able to repay the fed and continues doing business as usual.


It worked. In fact it worked so well that the fed has been continuing to give out money and now its called QEII.


We are into a whole new system of leveraging, printing money, and making loans.


I await eagerly for the analysis of the data.




Fri, 04/01/2011 - 16:49 | 1126549 Duuude
Duuude's picture

"...and that they would be able to repay the fed..."


Whoo hoo hoo...Bellysnort!


Stop it, yer killin me!

Fri, 04/01/2011 - 16:38 | 1126510 Dr. Porkchop
Dr. Porkchop's picture

These are the same cocksuckers that have the nerve to be insulted when the people suggest that perhaps their bonuses are in bad taste. "But.. we're the best and brightest!" they claim. What a joke.

Best of breed indeed, but what breed is that?

Fri, 04/01/2011 - 16:42 | 1126525 FunkyMonkeyBoy
FunkyMonkeyBoy's picture

in-breed. Gotta keep those bloodlines strong.

Fri, 04/01/2011 - 16:41 | 1126528 Bansters-in-my-...
Bansters-in-my- feces's picture

So did they let Lehman fail because they were shorting the US. Dollar and going long on gold.? What is the main concensus on this anyone.?

Fri, 04/01/2011 - 18:46 | 1126870 unununium
unununium's picture

That is regular-person thinking.  Regular-person thinking cannot engender understanding of bankster behavior.

They loaded up Lehman and AIG with their own sins, and sank them, so that they might live on and prosper.

I guess that makes Dick Fuld like Jesus.

Sat, 04/02/2011 - 09:47 | 1127697 Widowmaker
Widowmaker's picture

Dick Fuld needs to be more like Jesus-- tried, whipped, spit at and nailed to a fucking cross on Fraud Street for all the world to scoff at for thousands of years.

Sounds like a perfect end to that fuck to me!

Fri, 04/01/2011 - 16:55 | 1126571 Amish Hacker
Amish Hacker's picture

If you were trying to guarantee that your financial markets never arrived at a true clearing price, this would be a good way to do it.

Worth noting: the role played by Hank Paulson in this criminal mess.

Sat, 04/02/2011 - 09:48 | 1127710 Widowmaker
Widowmaker's picture

Hank Paulson is the definition of moral hazard and collusion with the enemy.  He is as un-American as it gets and should be tried for treason.

Fri, 04/01/2011 - 18:42 | 1126622 falak pema
falak pema's picture

GS believes in one rule :

The guy who founded GS told this story to his junior, budding,  next in line when asked how he'd got to top of the heap.

"My class buddy was the fast kid on the block. I copied all his math homework. That's how dumb I was...Thirty years later I was driving through town and I saw him waiting for his bus with his black umbrella and old raincoat wet under the rain. I gave him a ride. I asked him how life had treated him after all these years. He told me he was a professor in university and well...sometimes... found it difficult to pay for junior's private education and their holiday plans. He looked at me in admiration with my Rolls Royce  and said,

"You've done OK Sid".

I replied with my usual banker's modesty..."You know Charles, I buy for 5 and Sell for 20, with my margin of 12 I work out all right"...You should have seen the look on his face....Remember that young man, always treat your client like he was brilliant and you the dumb guy"...


Sat, 04/02/2011 - 09:49 | 1127714 Widowmaker
Widowmaker's picture

Goldman's one rule, accidentally fuck everyone you touch.

Fri, 04/01/2011 - 17:23 | 1126652 Geoff-UK
Geoff-UK's picture

So they make monthly interest payments to Uncle Ben until the currency goes to shit--then they offer up the shit collateral to square the books, and dust off their hands with a "job well done" smile?

Fri, 04/01/2011 - 17:30 | 1126664 MGA_1
MGA_1's picture

I'm in the wrong business - insolvent institutions is the way to go !

Fri, 04/01/2011 - 17:40 | 1126686 Eireann go Brach
Eireann go Brach's picture

Good ole Bama Bucks will be worthless soon, keep them handy for wiping your arse next year!

Fri, 04/01/2011 - 18:55 | 1126891 unununium
unununium's picture

So amusing that anyone thinks Obama has the least to do with any of it.  Like his predecessor, his job is to be ignorant and he does it so well.

Fri, 04/01/2011 - 17:43 | 1126692 Eireann go Brach
Eireann go Brach's picture

We do need a representative from Zero Hedge at the Bernanke press can we pull this off, so we see that quivering little heroin using lookalike twist his words?

Fri, 04/01/2011 - 17:50 | 1126708 John McCloy
John McCloy's picture

  And what were these foreign banks putting up as collateral? Our worthless paper, each other's worthless paper? What if they default does this create a clusterbomb of us stuck holding worthless paper because one company fails? 

   Have we been repaid?

Fri, 04/01/2011 - 18:00 | 1126728 Zero Govt
Zero Govt's picture

"..had the temerity to pledge bonds that had defaulted (i.e. had a rating of D)..."

Benny loves crap, face facts he's a junk bond dealer, he buys fuking worthless US T's week in week out afterall

Fri, 04/01/2011 - 18:45 | 1126863 Coldfire
Coldfire's picture

The Copraphagic Fed ... or What Is That Snake Doing With Its Tail In Its Mouth.

Fri, 04/01/2011 - 19:17 | 1126942 Rainman
Rainman's picture

We have found the Bad Bank and it is us.

Fri, 04/01/2011 - 20:35 | 1127081 chindit13
chindit13's picture

What I said.


Fri, 04/01/2011 - 21:52 | 1127207 Hephasteus
Hephasteus's picture

It's really OK. Fannie and freddie have been securitizing the same mortgages 3 or 4 times with the fed. This is just Standard Operating Procedure for Fuck Im A god Tyrone FIAT currency.

Fri, 04/01/2011 - 23:52 | 1127361 Yen Cross
Yen Cross's picture

LETS bury the ceramic blade, and slice the Gold into rational value.

Sat, 04/02/2011 - 00:15 | 1127395 nobodyimportant
nobodyimportant's picture

Yeah I am a newby but been reading Zhedge for awhile.  surprised there are no discerning remarks about Internal Revenue Service.  They are the only terrorists I have met. Please see the link.



Sat, 04/02/2011 - 05:07 | 1127592 Fíréan
Fíréan's picture

You read it, you get agitated, you write here some measure of complaint, sharing with others the outrage, and nothing gets done about it, nothing changes. Don't they just know it and will continue in their ways unabated, unhindered by anything or anyone.

Sat, 04/02/2011 - 08:23 | 1127651 tom a taxpayer
tom a taxpayer's picture

Was GS a bank at that point in time? Didn't Bendover Ben have to issue GS a license to be a Fed Reserve covered bank...and waived the 30 day waiting period to issue the license?

Sat, 04/02/2011 - 09:58 | 1127715 Widowmaker
Widowmaker's picture


Sat, 04/02/2011 - 10:06 | 1127728 wgpitts
wgpitts's picture

·         Its nice to have friends in special places... If any local banker tried to do this for a friend they would be sent to prison for 20 years - oh the joys of fascism and hypocrisy

Sat, 04/02/2011 - 11:11 | 1127823 TrustWho
TrustWho's picture

The american justice system is currently trying Barry Bonds and Roger Clemens for perjury. These guys are baseball players who probably lied to congress(Remember, In American justice system you are NOT guilty until convicted by a jury or impartial judge...don't laugh guys). In the greatest fraud committed in american history, how many bank CEOs have lied to Congress under oath?

Now we have a documented misrepresentation to congress by a bank executive..."Gary Cohn may have perjured himself by not disclosing truthfully his bank's discount window participation". WILL JUSTICE SYSTEM EVEN FILE CHARGES AGAINST GARY COHN?

As an american citizen proud of our founding fathers' principles, I am in a pool of tears. Who are we? 

Sat, 04/02/2011 - 14:27 | 1128178 TheMerryPrankster
TheMerryPrankster's picture

Same as it ever was,



Goldman Sachs Group Inc. (GS) awarded Chairman and Chief Executive Officer Lloyd C. Blankfein $19 million in compensation for 2010, almost double the prior year, and granted him the first cash bonus in three years.

The total includes $5.4 million in cash, $12.6 million in restricted stock, a $600,000 salary and about $464,000 in other benefits, the New York-based firm’s proxy statement showed. Blankfein’s $9.8 million pay for 2009 included $9 million in restricted stock plus salary and other compensation.

Goldman Sachs, the fifth-biggest U.S. bank by assets, boosted Blankfein’s compensation for a year in which earnings dropped 38 percent and the stock price was little changed. The amount falls in the middle ground between 2008, when Blankfein, 56, and six other senior officers got no bonuses, and the record-setting $67.9 million award he received for 2007.


Same as it ever was...

Sun, 04/03/2011 - 08:29 | 1129547 Catullus
Catullus's picture

It was illegal for the Fed to accept anything other than AAA debt at the time. The entire game of TARP at the time was to ask for forgivness, not permission from Congress.  Even the dollar amount for the original TARP and everything it would be used for was bullshit.  It was a 12 page, Get Out of Jail Free card.

Hank Paulson and Timothy Geithner need to go to jail.  No more of this "your Congress allowed us to..." bullshit.  They were not allowed at the time to do what they did.

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