Securities laws require underwriters to disclose, so they don't get off the hook that easily and Paulson would have known that. Sure AIG is on the hook for their own behavior. But Goldman took taxpayer dollars and was the benficiary (via collateral) of the taxpayer bailout of AIG. Since they may have violated securities laws, Goldman and several other investment banks may yet have to answer to the courts.
Did AIG Insure Dodgy Mortgage Products for Goldman Sachs?
- Thread starter Greg Richards
- Start date
Securities laws require underwriters to disclose, so they don't get off the hook that easily and Paulson would have known that. Sure AIG is on the hook for their own behavior. But Goldman took taxpayer dollars and was the benficiary (via collateral) of the taxpayer bailout of AIG. Since they may have violated securities laws, Goldman and several other investment banks may yet have to answer to the courts.
Hey Anaconda, Pabst is right, it's on CME's own web site. CME Clearing is the "counterparty of last resort" for products traded on their exchange. It's not just talk, it's in the legal framework. It's what gives CME "an important customer advantage" over OTC trading.
Once again you really don't know what the fuck you're talking about do you?
"Everyone" knows that someday-be it tomorrow or two centuries from now-a Cat 5 hurricane will wipe out Miami. Do insurance carriers not write insurance even though they KNOW someday they'll be dinged? Some companies are prudently pulling out of Florida but others who can charge more-the equivalent of selling high volatility- remain. And if a Cat 5 does hit and those insurers can't pay the ENTIRE MEDIA will be saying, "bailout those poor homeowners who paid their premiums but got screwed by the "greedy" insurer."
Further if you knew anything about these markets you'd realize the break in mortgage back prices has been indiscriminate as impacting even "quality" paper. IOW's even if you owned a book of mortgages without an iota of default the value of that paper would be off 30% or more. The trading world is filled with guys who bought pars, puked 70's and that paper will pay off at par. Such is leveraged life.....
As far as AIG: Neither you nor I have any clue as to what execs were paid or how much stock they owned. Yes I agree compensation to execs is a "free call" but in most every blow up I've seen-be it Hutton, Drexel, Enron, BSC or LEH there were MANY in top management who were LOADED UP with worthless stock when the end came. Dick Fuld is a complete asshole but even he dropped a cool half a billion on his LEH holdings.
"Everyone" knows that someday-be it tomorrow or two centuries from now-a Cat 5 hurricane will wipe out Miami. Do insurance carriers not write insurance even though they KNOW someday they'll be dinged? Some companies are prudently pulling out of Florida but others who can charge more-the equivalent of selling high volatility- remain. And if a Cat 5 does hit and those insurers can't pay the ENTIRE MEDIA will be saying, "bailout those poor homeowners who paid their premiums but got screwed by the "greedy" insurer."
Further if you knew anything about these markets you'd realize the break in mortgage back prices has been indiscriminate as impacting even "quality" paper. IOW's even if you owned a book of mortgages without an iota of default the value of that paper would be off 30% or more. The trading world is filled with guys who bought pars, puked 70's and that paper will pay off at par. Such is leveraged life.....
As far as AIG: Neither you nor I have any clue as to what execs were paid or how much stock they owned. Yes I agree compensation to execs is a "free call" but in most every blow up I've seen-be it Hutton, Drexel, Enron, BSC or LEH there were MANY in top management who were LOADED UP with worthless stock when the end came. Dick Fuld is a complete asshole but even he dropped a cool half a billion on his LEH holdings.
Hey Greg - if Goldman materially misrepresented, that's an issue for the courts, for sure.
It seems, however, people are jumping to conclusions regarding Goldman representing based on AIG's positions blowing up so bad. I would suggest there is clear evidence that AIG was fundamentally incompetent at what they were doing, and the fact that they blew up is not in and of itself evidence that Goldman did something wrong.
For some of the folks here who are clearly unable to see anything other than black and white (not directed at you Greg) - let me be explicit - that does not mean Goldman didn't likely to do other things worthy of reproach.
We'll just have to wait a couple of years for the Michael Lewis book to get the relevant details.
It seems, however, people are jumping to conclusions regarding Goldman representing based on AIG's positions blowing up so bad. I would suggest there is clear evidence that AIG was fundamentally incompetent at what they were doing, and the fact that they blew up is not in and of itself evidence that Goldman did something wrong.
For some of the folks here who are clearly unable to see anything other than black and white (not directed at you Greg) - let me be explicit - that does not mean Goldman didn't likely to do other things worthy of reproach.
We'll just have to wait a couple of years for the Michael Lewis book to get the relevant details.
That's my point. Tavakoli already provided the information in her books (I read them). Both the structured finance book and her book with Buffett in the title (gives more detail of dodgy transactions). The Fortune article she links to shows a deal that she says securities professionals knew or should have known were overrated and overpriced and therefor missold because that was not explicity disclosed.
She was the expert witness in a class action shareholder case against Merrill that used that used this argument, and she says we should use the same argument in these matters.
She was the expert witness in a class action shareholder case against Merrill that used that used this argument, and she says we should use the same argument in these matters.
Quote from Random.Capital:
We'll just have to wait a couple of years for the Michael Lewis book to get the relevant details.
Another curious fact is that Tavakoli and Lewis were both in the Liar's Poker training class together at Salomon. She mentions that in her Buffett book. They know each other.
Excuse me, but a "counterparty of last resort" is not the same thing as AIG being the primary & only counterparty.
CME will enforce legal action on the defaulting counterparty and take all steps required to recover whatever they need. They will also attempt to find a substitute counterparty for the transaction. Once all options are exhausted, then CME is the "counterparty of last resort". If someone fails to deliver, you don't automatically hold CME accountable, it does not work like that. I went through this with one of the directors at CME in full detail, in case I got matched up with some speculator who had no inventory.
AIG had no such options whatsoever, it is the only counterparty you deal with. It is the originator of the contracts and direct dealer. Is CME out there writing futures contracts left and right to everyone? I don't think so, but hey, maybe they are lying about not taking any positions.
Not 15 minutes ago you were claiming CME wasn't a counterparty at all.
If you want to have meaningful discourse, how about turning down the absolutism a notch or two?
LOL.
In DEAR MR. BUFFETT, Tavakoli says: "I had joined Salomon Brothers' summer 1985 training class lampooned by my classmate Michael Lewis in his book, Liars Poker."
http://www.amazon.com/Dear-Mr-Buffe...bs_sr_1?ie=UTF8&s=books&qid=1238003153&sr=8-1
No, it's just that you choose to be a retard, so don't let me stop you, as I really do not give a fuck and your entertainment value has worn off. Plus, I gtg anyway. But in the extreme case you do wish to get your head out of the gutter, I suggest taking a Risk Management & Insurance course at your local community college as a starting point.