Shocked! We are shocked! Goldman Sachs and Morgan Stanley were offered special treatment from the Fed! That’s never happened before.
For the record this website will NEVER forget the bailouts of 2008-2009. Those were tough times for many Americans. Very tough, and the big banks were saved just because they were “big banks.” Goldman Sachs should be history. It should no longer exist. But you know we had to abandon capitalism to save capitalism or some such nonsense.
I just think of that winter of 2008-2009 and then think of how the Fed bailed these guys out, banks that were leveraged 100 to 1 or more, while I was watching neighbors down the street lose their homes. The people being foreclosed on because they couldn’t do their books were financially more sound than many of the big banks. But the little guys were left to suffer.
It would have been brutal enough if the big banks and bankers had gone down with middle America. But it was an extra kick in the teeth when Goldman instead enjoyed the biggest bonuses in its history just 2 quarters after almost imploding courtesy of the American people. Why? Because they were a crony bank. They knew the right people in government.
Not only that, the bailouts encouraged many to think that nothing had any cost anymore. If the big banks got free money, why not everyone else? We are still laboring under this misunderstanding and it has warped our politics.
End the Fed.
(From The Wall Street Journal)
Federal Reserve officials told Goldman Sachs Group Inc. GS 1.22% and Morgan StanleyMS 0.68% that they were about to flunk a portion of the annual stress tests but offered them a deal to avoid an outright fail and continue paying billions to shareholders.
In phone calls to executives of the Wall Street titans on June 21, regulators told them that to fully pass the test, they would have to cut almost in half the combined $16 billion they had hoped to pay out to shareholders, according to people familiar with conversations between the Fed and both banks.
But Fed officials gave the banks an unprecedented option: If they agreed to freeze their payouts at recent levels, they would get a “conditional non-objection” grade and avoid the black eye of failure. That meant the banks could pay out a combined $13 billion, or about $5 billion more than what they would have given back to investors if they had decided to retake the test and get a passing grade.
It also will boost a profitability measure that helps determine how much Goldman Chief Executive Lloyd Blankfein and Morgan Stanley CEO James Gorman are paid.