Did Goldman Sachs Just Win Big?

On p.A4 of today’s WSJ, Deborah Solomon and Jon Hilsenrath report more detail on the Treasury’s “Bad Bank” funding plan.  On first (and third) read I’m not impressed, but we’ll go through all the available details and report back later.For now, I just have one question.  Isn’t this essentially the same plan that Goldman Sachs has been shopping around for the past month or so?  There’s nothing necessarily wrong with that, of course.  But it would be a huge win for Goldman and Lloyd Blankfein – explaining, for example, the confidence displayed in his recent FT article.

And, whatever the reality of lobbying, pressure, and idea exchange here, the optics (as they say in the message spinning business) don’t look great.


Originally published at the Baseline Scenario and reproduced here with the author’s permission.

3 Responses to "Did Goldman Sachs Just Win Big?"

  1. [email protected]   March 3, 2009 at 11:41 am

    A curious thing to me about the public private partnership idea is that this is exactly a description of a bank, in the sense of an insured deposit-taking institution. The government guaranties some liabilities, a group of private investors put up some capital and employ some managers. The entity buys (or makes) loans. The Obama Administration, like its predecessor, seems committed to rescuing Wall Street “banks” which hold by far the greatest proportion of the nation’s deposits and loans and to maintaining a credit system that relies heavily on securitization. All this needs to be part of the public debate. I would submit that very high concentration in a few, very large, global financial conglomerates engaged in high velocity arbitrage, together with creation and trading of synthetic securities and derivatives outside of the purview of regulation and supervision, constitutes a definition of our problem. A part of the solution would seem to lie in creating incentives for the thousands of reasonably healthy smaller banks in this country to take up a greater part of the credit system, including incentives for private equity to invest in them.

  2. Luke Lea   March 3, 2009 at 2:27 pm

    I’ve read that the top 10% of U.S. taxpayers pay roughly 60% of total taxes. Doesn’t this mean the so-called “taxpayer bailout” is esentially a case of the top .001% of the population robbing the next 9.99%, assuming the looters of our

  3. Luke Lea   March 3, 2009 at 2:29 pm

    Sorry, my above comment got cut off. It was meant to read:”I’ve read that the top 10% of U.S. taxpayers pay roughly 60% of total taxes. Doesn’t this mean the so-called “taxpayer bailout” is esentially a case of the top .001% of the population robbing the next 9.99%, assuming the looters of our financial system are among the relatively small number of super-wealthy?In other words, the billionaires are robbing the millionaires.If so, no wonder there is so much yelling and screaming.”