Sunday, May 17, 2009

Goldman to repay TARP with "AIG" money

Ah, the fungibility of money. Charlie Gasparino in the Daily Beast:

Based on the stress tests, Goldman Sachs and JP Morgan were deemed to be among the strongest of the big banks; unlike Morgan Stanley, Bank of America, and Citigroup, both Goldman and JP Morgan were not required by regulators to raise capital levels. Since that time, officials at Goldman and JP Morgan have been pressuring regulators to allow them to repay the bailout money that was granted from TARP.

Another person close to the situation says people at JP Morgan feel comfortable they have convinced both the Treasury and Fed that they should be allowed to repay the money along with the first group of banks that will be allowed to do so; that announcement, these people say, could be made as early as next week.

Last month, Blankfein had this to say:

Because Goldman Sachs is now receiving money from the federal government, Blankfein says, the compensation issue is on the "forefront" of the executives' minds.

"And since money is fungible, we're very, very careful how we spend the money and how it appears that we're spending the money," Blankfein says. "It certainly affects our behavior, and you know something — it should affect our behavior."

The Government doesn't want people looking over Goldman's books, and Goldman doesn't want anyone looking over their shoulder, so they'll pay the TARP money back, but still have $37 billion of FDIC guaranteed bonds on their books that they've been able to sell, allowing them to have low cost funding for their positions.

But no one asks the question to Goldman, that is asked of Slippery Simons. Why is it that Goldman's public hedge funds perform so poorly, but Goldman's prop desk doesn't?

So give the TARP money back-STAT!

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