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Totally Busted: The Truth About Goldman's Bailout by the Fed

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December 18, 2010 – Comments (2) | RELATED TICKERS: GS

Recent disclosures from the Federal Reserve reveal that honesty was one of the earliest casualties of the 2008 financial crisis. These disclosures contain a number of juicy tidbits, like the fact that Goldman Sachs received tens of billions of dollars in direct and indirect succor from the Fed.

By repaying its TARP loan, for example, Goldman wriggled out from under the nettlesome compensation limits imposed by TARP, while also conveying an image of financial strength. But this “strength” was illusory. Goldman repaid the TARP loans with funds it procured days earlier from the Federal Reserve. Then, over the ensuing months, Goldman recapitalized its balance sheet by selling tens of billions of dollars of mortgage-backed securities to the Fed.

And the public never knew anything about these activities until two weeks ago, when the Fed was forced to reveal them....

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2 Comments – Post Your Own

#1) On December 18, 2010 at 12:43 PM, ChrisGraley (31.89) wrote:

Goldman is the FED

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#2) On December 18, 2010 at 8:08 PM, ResearchLover (< 20) wrote:

At least if we the public didn't know, what evidence is there that many Goldman insiders had much information about the bailout so as to profit from it?  Theoretically, the fed's move prevented insiders from executing a self-fulfilling profit-driven short sale of the company's value all the way to 0. More than likely not the real case of what would have happened, but something the fed may have been thinking about nonetheless.

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