Saturday, October 03, 2009

This is a very good question:

Over at TNR, something I've been wondering about:
A Question the Fed Needs to Answer Regarding Goldman Sachs

At the height of the financial panic last fall Goldman Sachs became a bank holding company, which enabled it to borrow directly from the Federal Reserve. It also became subject to supervision by the Federal Reserve Board (with the NY Fed on point) ...

Goldman is also currently engaged in private equity investments in nonfinancial firms around the world, as seen for example in its recent deal with Geely Automotive Holdings in China. U.S. banks or bank holding companies would not generally be allowed to undertake such transactions--in fact, it is annoyed bankers who have asked me to take this up.

Would someone from the NY Fed kindly explain the precise nature of the waiver that has been granted to Goldman so that it can operate in this fashion?

If this is temporary, is it envisaged that Goldman will cease being a bank holding company, or that it will divest itself shortly of activities not usually allowed (and with good reason) by banks? Or will all bank holding companies be allowed to expand on the same basis?
Goldman got a huge advantage with the waiver - they could borrow from the Fed at low rates - but it was supposed to be temporary, wasn't it?


Let's see.....





Nah, I don't see any chance whatever of special favoritism here. Why would anyone question the pure, pure motives of our appointed officials?

By Anonymous Anonymous, at 10/03/2009 3:22 PM  

About a month ago there was a news story about Goldman Sachs reporting to authorities that a Russian emigre program who had been until recently employed by them had stolen software from them. The purpose of the software was to manipulate the market. The new media reported it with alarm, "what if the software gets into the wrong hands" and with no sense of irony. Some days it seems hopeless.

By Anonymous Rockie the Dog, at 10/03/2009 6:56 PM  

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