Posts filed under “Really, really bad calls”

iBanks Grabbed $50 Billion in AIG Bailout Cash

Yesterday, in Backdoor Bailouts for Goldman Sachs?, we noted that GS, as well as Morgan Stanley, Merrill Lynch, and Deutsche Bank, were all made whole on their bad bets with AIG.

That’s right, what was misleadingly described as systemic risk turned out to be in large part little more than a counter-party bailout — money for the very same people who helped cause the problem.

Only the $25 billion figure I mentioned was off by 100% — the WSJ is reporting this morning it was $50 billion dollars, almost a third of $173 billion total AIG loot:

“The beneficiaries of the government’s bailout of American International Group Inc. include at least two dozen U.S. and foreign financial institutions that have been paid roughly $50 billion since the Federal Reserve first extended aid to the insurance giant.

Among those institutions are Goldman Sachs Group Inc. and Germany’s Deutsche Bank AG, each of which received roughly $6 billion in payments between mid-September and December 2008, according to a confidential document and people familiar with the matter.

Other banks that received large payouts from AIG late last year include Merrill Lynch, now part of Bank of America Corp., and French bank Société Générale SA.

More than a dozen firms with smaller exposures to AIG also received payouts, including Morgan Stanley, Royal Bank of Scotland Group PLC and HSBC Holdings PLC, according to the confidential document.”

Now you know why the Fed was so reluctant to reveal who the coutnerparties were.

This is a giant FUCK YOU to the American taxpayer. Isn’t there some Congressmen (besides Ron Paul) who are morally offended by the Paulson plan, which is slowly becoming the Geithner plan?  Isn’t there anything that can be done?

According to the WSJ, these are the counter-party banks paid by AIG with bailout money:

Covered Counterparties
Goldman Sachs
Deutsche Bank
Merrill Lynch
Société Générale
Calyon
Barclays
Rabobank
Danske
HSBC
Royal Bank of Scotland
Banco Santander
Morgan Stanley
Wachovia
Bank of America
Lloyds Banking Group

This is simply unconscionable . . .

>

Previously:
Backdoor Bailouts for Goldman Sachs? (March 5, 2009)

http://www.ritholtz.com/blog/2009/03/backdoor-bailouts-for-goldman-sachs/

Solvent Insurer / Insolvent Insurer (March 4, 2009)

http://www.ritholtz.com/blog/2009/03/solvent-insurer-insolvent-insurer/

Top U.S., European Banks Got $50 Billion in AIG Aid
SERENA NG and CARRICK MOLLENK
WSJ, MARCH 7, 2009

http://online.wsj.com/article/SB123638394500958141.html

Category: Bailouts, Corporate Management, Finance, Legal, Markets, Politics, Really, really bad calls

Was the ’00-03 Crash Bush’s Fault? ’09 Obama’s?

The incessant parade of bad advice, partisan quackery and general ignorance about the way markets work is fascinating to watch. I used to find it annoying, but now I simply use it as a way to make money. Just find the dumbest of the group, and take the other side of their trades. The latest…Read More

Category: Bailouts, Economy, Financial Press, Markets, Psychology, Really, really bad calls

Good Money After Bad: U.S. to Up Citi Stake

Here we go again: It looks like you and me and that guy behind the tree are going to be on the hook for a few billion more dollars: “Citigroup Inc. is in talks with federal officials that could result in the U.S. government substantially expanding its ownership of the struggling bank, according to people…Read More

Category: Bailouts, Corporate Management, Credit, Politics, Really, really bad calls

Experts, Crashes, Media, Skepticism

There is a surprisingly interesting article at Money Magazine on why so many so-called experts utterly missed the market crash, credit crisis, and housing collapse. Its an interview with Philip Tetlock who is (with no small amount of irony), an expert on experts. He is a professor of organizational behavior at the University of California-Berkeley’s…Read More

Category: Economy, Financial Press, Markets, Psychology, Really, really bad calls

Synchronized Boom, Synchronized Bust

Mark Faber wants to do nothing and let the free market correct the excesses. I agree — but I know its only a pipedream. Given we have already had unprecedented interventions, the let-the-market-correct ship has already sailed. And, no US politician has the stomach for that. Excerpt: “As a consequence of this expansionary cycle, the…Read More

Category: Bailouts, Really, really bad calls

If Bankers Were Firemen . . .

Very amusing Pat Bagley cartoon, via The Salt Lake Tribune > > http://extras.sltrib.com/bagley/Archive.asp?Vol=content&Num=10

Category: Bailouts, Credit, Derivatives, Humor, Markets, Really, really bad calls

A Cyclical Look at P/E Ratios

Here’s another brutal look at where P/E rations might end up going before this is all over, via Bob Bronson: I am very skeptical of earnings forecasts, because they have been so terrible for most of my adult life. The conspiracy of optimists always seems to overestimate future earnings. Trailing earnings are real data, not…Read More

Category: Earnings, Markets, Really, really bad calls, Technical Analysis, Valuation

Failings in Structured Finance Agency Conflicts

As we begin to address regulatory reform in the financial services industry there is a clear consensus view that the credit rating agencies played a role in fomenting the crisis environment. In February 2007, Joe Mason and I presented a paper warning of the risks that CDO market problems would present in the capital markets…Read More

Category: Credit, Derivatives, Finance, Markets, Real Estate, Really, really bad calls, Research

Barron’s vs. Cramer, Part II

We add another chapter in the ongoing debate between Barron’s, the weekly paper that is sister to the WSJ, and James Cramer, the former hedge fund manager now turned pundit/CNBC star/game show host. The back and forth between CNBC and Barron’s amounts to an absurd debate over what Cramer’s stock picking record on the show…Read More

Category: Financial Press, Hedge Funds, Really, really bad calls, Television

Barron’s vs. Cramer: The Charts

Barron’s observes: “By most measures, Jim Cramer did worse than the market, but CNBC and the TV journalist have taken few steps to clarify his exact performance for his show’s growing audience.” Here are the charts Barron’s uses to make their argument:

Category: Digital Media, Financial Press, Really, really bad calls, Television