Saturday, April 18, 2009
Goldman's cheap source of funding
Barron's has a good article about Goldman Sach's abuse of the FDIC liquidity program TLGP (Temporary Liquidity Guarantee Program.)
Goldman has used this program to sell almost $30 billion of FDIC debt, and they are looking to do another $7 billion more.
This is allowing Goldman to make another $600 million on their trading positions with this cheap financing.
Goldman, who tells the world they want to repay the TARP money, should then no longer be able to use this FDIC program to fiance their trading at lower rates.
Goldman of course, objects saying that these programs, in their eyes, are unrelated.
AN ALWAYS-OPPORTUNISTIC GOLDMAN is making use of a program that was designed to encourage lending, not cheaply finance its trading positions. When FDIC Chairman Sheila Bair unveiled the program in October, she said its aim was to "unlock interbank credit markets and restore rationality to credit spreads. This will free up funding for banks to make loans to creditworthy businesses and consumers."
Goldman, however, does little lending. In fact, Viniar, its CFO, boasted on the earnings call that it has "virtually no direct exposure to the consumer."
What else is new. Another taxpayer subsidy for Goldman Sachs!
Posted by Palmoni at 7:50 AM