In an interview with the Huffington Post, the Harvard Law School Professor laid down four markers for a stable and sufficient recovery, offered support for the prosecution of individuals proven to have committed crimes that contributed to the economic downturn, and criticized bank executives for their rising compensation levels. She also insisted that if Goldman Sachs wanted to pay back the bailout funds it received to get out from under government restrictions, it should have to return all funds, including guarantees and money it receives as a counterparty to AIG. From: "Elizabeth Warren: Stress Tests Need To Be Transparent" http://www.huffingtonpost.com/2009/05/01/elizabeth-warren-with-str_n_194124.html
I wonder if she feels all the euro banks should have to give the $ back too, or does that only apply to GS?
De-TARPing to include returning their US Treasury/"AIG" loot first, tens of billions, that's a big FU to GS et al. I like it, time someone addressed the stupendous kleptocracy issues. Remaining under TARP becomes similar to unit discipline in the military - where whole units might be totally confined to barracks for 6 or more months, Xmas or not, until the case of grenades resurfaces (happened in my state). Of course this might be a bigger problem, more like where a large fraction of the unit was involved, *each* stealing a case of grenades...uh oh.
These lawer 'intellectuals' have no clue. AIG was margined at GS. They needed to post additional margin because of their rampant/unhedged massive leverage. They did not advise or recommend AIG to do what they do in the course of their business. They were simply the 'bank'. Can I go back to American Express and say, "I was stupid, can I cancel all that debt I owe you?" Same thing goes for Obama. Calling the Vulture Funds (Distressed Debt/Private Equity Funds) 'vultures' shows that he really has no clue how finance works. Like collection agencies they buy the debt at 15-20 cents on the dollar, and put pressure on the company to get paid. To say they are 'un-American' is incredibly naïve. They are the creditors. They should 'do-the-right-thing' and give the company to the UAW? Noone will ever buy US Corporate debt again if the indentures are just 'guidelines' if everything goes right. We have bancruptcy laws, they have rights as debt holders. Just because the Government steps in to help the union (those that elected Obama to office) do we ignore US corporate law? Change the rules in the middle of the game? How is this 'fair'? This gave me chills when I heard it come out of his mouth. "These debt holders want their proper position according to US bancruptcy law, they are 'unamerican'."
Events will proceed in a manner that is favorable to GS (and JPM, MS et al.) because they still hold the political power. They will continue to be the primary beneficiaries of bailouts, and they will end up gobbling up a number of regional banks that will appear to be in trouble from the stress tests but in reality are much sounder than the SIV-laden Wall Street banks. Obama is in their pocket as much as Bush was.
I wonder if she would approve of prosecutions of Barney Frank, Nancy Pelosi, Chris Dodd and others who are responsible the real estate bubble and resulting mortgage collapse.
why is GS the only bank anyone sees? What about BNP Paribas, and all the other Euro banks that in some cases got way more collateral $ because the govt. decided to prop up a disastously overleveraged, under-reserved firm???
Thanks for the link. Agree with her on having some good transparency with the tests, otherwise their value is questionable. Second, the "reporter" should have asked her if she has read/listened to available public disclosure regarding GS/AIG. And if so, what is her response. For example: http://blogs.wsj.com/deals/2009/03/20/live-blogging-the-goldman-sachs-aig-call/