Goldman Sachs is taking maximum advantage of government freebies, while at the same time poormouthing them. It’s possible that Goldman didn’t really need or want bailout money, but was forced to take it to mask other banks who desperately needed it. Once it got it, however, it didn’t wait to profit from the taxpayer largess.
One of its biggest benefits was indirect. Goldman was owed money by AIG; exactly for what is not clear to me, but AIG paid Goldman about $12 billion. Goldman knew it was making a bad bet on whatever trade it made with AIG as a counterparty, but the government bailed it out at 100 cents on the dollar. Shouldn’t it pay some penalty for making a bad bet, say making only 80 cents on the dollar? That would have whiped out its $1 billion profit for last quarter, although Goldman argues that it would not. There are even more questions about Goldman’s tax year accounting. But in any case it came out smelling like a rose thanks to the taxpayers.
Today’s NYT reveals that Goldman is cashing in on another taxpayer subsidy that guarantees its debt for free, even as it touts its withdrawal from the TARP. This program apparently helped it raise the capital that it says it will use to replace the TARP money. The NYT points out that this program could bankrupt the FDIC, but we’ll all hope that it won’t.