Wednesday, December 23, 2009

Goldman Sachs Builds New Headquarters in New York: With Yet More TaxPayers Help

New Headquarters under construction
By the middle 2010, 6,000 employees of Goldman Sachs will move a new 43-story, steel-and-glass skyscraper in Manhattan. While GS has been recording record profits lately, using tax payer TARP money and being repaid throughAIG bailout (why, why, why?), Bloombergs says they also benefited from the government’s aid in building their new headquarters.
GS got to sell $1 billion of tax-free Liberty Bonds and get about $49 million of job-grant funds, tax exemptions and energy discounts. The interest expense on the financing is about $175 million less over 30 years than if the company had issued corporate debt at the time, according to Bloomberg.
GS received $10 billion in capital, guarantees on about $30 billion of debt and the ability to borrow cheaply from the Fed. The Fed’s bailout of AIG and its decision to pay the insurer’s counterparties in full, funneled an additional $12.9 billion to Goldman Sachs.
Says Bloomberg: "That’s not how the Goldman Sachs rescue looks to William Black, a professor of economics and law at the U. of Missouri-Kansas City and a former bank regulator. He says the government has been far too generous in allowing the firm to get federal backing without either seizing equity or curbing risks. “It’s just an unbelievably bad deal,” Black says. “We could hire any middle-tier guy or gal at Goldman, and they would tell us within 15 seconds that the deal we have made as a nation with Goldman is underpriced by many, many orders of magnitude and that we are insane.”

An article on Naked Capitalism today says that the collapse of the CDO bonds and the collapse of AIG were "a deliberate strategy by Goldman". "To realize on their bet against the housing market, Goldman needed the CDO bonds to collapse in value, which would cause AIG to be downgraded and lead to AIG posting collateral and Goldman getting paid for their bet".
Yet nothing happens against his firm and they keep going with inpunity, now in their brand new building.

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