The Empire Strikes Back

Discussion in 'Wall St. News' started by cstfx, Feb 10, 2010.

  1. cstfx


    In an effort to push back a bit on all the negative press Goldman Sachs is getting of late, it appears that the NYTimes has gone one accusation too far and Goldman is beginning to refute the lies and inaccuracies being bandied about:

    Goldman Responds To 'Contradictory' Theories 'That Don't Stand Up'

    Looks like Goldman has declared war on The New York Times

    The following appears on Goldman's website:

    'Today, The New York Times wrote another story about certain aspects of the relationship between Goldman Sachs and AIG titled “Testy Conflict With Goldman Helped Push A.I.G. to Edge.” This is the third theory the paper has put forward since September 2008. The theories are contradictory and many of the supporting "facts" don't stand up to serious scrutiny. ‪‪

    Here are some of the errors:

    NYT assertion: "Goldman countered that it was owed even more, while also resisting consulting with third parties to help estimate a value for the securities."

    The facts: We would have been happy to consult with third parties. In fact, on numerous occasions we attempted - unsuccessfully - to agree on a process with AIG to obtain third-party values.

    NYT assertion: "Goldman's demands for billions of dollars from the insurer helped put it in a precarious financial position by bleeding much-needed cash."

    The facts: Relative to the size of AIG’s overall business, Goldman Sachs was a small counterparty. We don’t believe our marks were “aggressive,” they reflected market prices at the time. We requested the collateral we were entitled to under the terms of our agreements.The idea that AIG collapsed because of our marks is not credible. In any event, the story later asserts that, by the spring of 2008, AIG's dispute with Goldman Sachs was just one of its many woes.

    NYT assertion: "In addition, according to two people with knowledge of the positions a portion of the $11 billion in taxpayer money that went to Societe Generale, a French bank that traded with A.I.G, was subsequently transferred to Goldman under a deal the two banks had struck."

    The facts: The assertion is false and misleading. Goldman Sachs provided financing to many counterparties, but in that role we would not have known whether a counterparty had obtained credit default protection, let alone from whom or in what amount.

    NYT assertion: "Goldman Sachs stood to gain from the housing market's implosion because in late 2006, the firm had begun to make huge trades that would pay off if the mortgage market soured."

    The facts: This statement is misleading and mischaracterizes how we positioned ourselves at the start of 2007. Goldman Sachs, like most other financial firms, was long the mortgage market at the end of2006. In order to bring our exposure closer to flat, we began hedging our mortgage holdings in the first quarter of 2007. Those hedges certainly limited our exposure to the declining housing market, but we also recorded substantial writedowns on our residential mortgage holdings. Moreover, in most of the trades with AIG described in the article, Goldman Sachs was hedged by an offsetting position and did not have a short directional bet on the mortgage market.

    NYT assertion: "It's not just who was right and who was wrong," Mr. Brown said. "I also want to know their motivation. There could have been an incentive for Goldman to say, 'AIG, you owe me more money.'"

    The facts: Our only motivation was to provide marks that represented fair market value and to enforce the rights we had in our contracts with AIG in order to protect Goldman Sachs and its shareholders.

  2. jorgez


    GS always has the right to correct things in court.
    They should sue NYT if they are upset.

    But why do they not do this ....
    All they need to do is turn up in court and promise to tell the truth.

    How hard can that be?
  3. GS up 10%, NYT down 10%. :cool:
  4. Watch for NYT to appear on GS "conviction sell list" soon :cool:
  5. That could get GS "convicted" and finally put out of business. :cool:
  6. MattF


    NYT needs to push the boundaries a bit more for GS to sue :D

    Then again, suing may just open up another can of worms...
  7. I think the real complaint about AIG/GS is that had the government not bailed out AIG, those CDS contracts would have been worth fuckall. So in effect, taxpayers bailed out GS to the tune of billions and insured teh obligations were paid off at 100 cents on the dollar. Maybe next time it would occur to someone at the Treasury to try to apply a haircut to them in exchange for the bailout. Paulson was too busy wetting his pants apparently to consider this.

    You'd think at least we could get a thank you. Instead, they gave us Obama.