Goldman Sachs and It's Scams - Bk Rprt

7/31/2019 Goldman Sachs and It's Scams - Bk Rprt

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Therefore, if Investment Bank Z is leveraged at 33:1, and declining marketconditions cause the value of Z's balance sheet assets to drop by just 3%, Bank Z'sequity is wiped out. It is insolvent.

We can illustrate with a hypothetical.

(a)In May, Z's entire balance sheet consists of collateralized debt obligations(cdos) valued at par (they are valued at 100 cents on the dollar); but

(b)Market conditions deteriorate in June, causing cdos values to fall from par to97 cents on the dollar.A security trading at 97 cents on the dollar doesn't sound too bad. But forInvestment Bank Z, leveraged at 33:1, 97 cents on the dollar is a completedisaster. This 3% decline in the value of its balance sheet assets means the

bell is tolling. Z's entire equity stake is wiped out. The company isinsolvent.

THISIS THE DOWNSIDE OF EXCESSIVE LEVERAGE.

Goldman's leverage ratio once hovered at 30 to 1; now it stands at around 12to 1. A considerable drop but still insufficient to be safe enough for investors.


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CDO, CDS AND DERIVATIVES ALL THE THINGS WE

WERENT SUPPOSED TO UNDERSTAND

CDO

A Collateralized Debt Obligation, or CDO, is a synthetic investment created by

bundling a pool of similar loans into a single investment that can be bought or sold.

An investor that buys a CDO owns a right to a part of this pool's interest income

and principal.

For example, a bank might pool together 5,000 different mortgages into a CDO.

An investor who purchases the CDO would be paid the interest owed by the 5,000

borrowers whose mortgages made up the CDO, but runs the risk that some

borrowers don't pay back their loans. The interest rate is a function of the expectedlikelihood that the borrowers whose loans make up the CDO will default on their

payments - determined by the credit rating of the borrowers and the seniority of

their loans.

CDOs are created and sold by most major banks (e.g. Goldman Sachs, Bank of

America) over the counter, i.e. they are not traded on an exchange but have to be

bought directly from the bank. Securities Industry and Financial Markets

Association estimates that US$ 503 billion worth of CDOs were issued in 2007.

CDOs played a prominent role in the U.S. subprime crisis, where critics say CDOs

hid the underlying risk in mortgage investments because the ratings on CDO debt

were based on misleading or incorrect information about the creditworthiness of

the borrowers.

CDS: A credit default swap

(CDS) is a form of insurance

that protects the buyer of the

CDS in the case of a loandefault. If the borrower

defaults (fails to repay the

loan), the lender who has

bought traditional insurance

can exchange or "swap" the


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defaulted loan instrument (and with it

the right to recover the default at some later time) for money - usually the face

value of the loan.

The significant difference between a traditional insurance policy and a CDS is that

anyone can purchase one, even those who do not hold the loan instrument and mayhave no direct "insurable interest" in the loan. The buyer of the CDS makes a series

of payments (the CDS "fee" or "spread") to the seller and, in exchange, receives a

payoff if the loan or any credit instrument named in the contract (typically a bond

or loan) defaults, creating a credit event.

Credit default swaps have existed since the early 1990s, and increased in use after

2003. By the end of 2007, the outstanding CDS amount was $62.2 trillion, falling

to $38.6 trillion by the end of 2008.

Most CDSs are documented using standard forms promulgated by the International

Swaps and Derivatives Association (ISDA), although some are tailored to meet

specific needs. Credit default swaps have many variations. In addition to the basic,

single-name swaps, there are basket default swaps (BDS), index CDS, funded CDS

(also called a credit linked notes), as well as loan only credit default swaps

(LCDS). In addition to corporations or governments, the reference entity can

include a special purpose vehicle issuing asset backed securities.

Credit default swaps are not traded on an exchange and there is no requiredreporting of transactions to a government agency. During the 2007-2010 financial

crisis the lack of transparency became a concern to regulators, as was the trillion

dollar size of the market, which could pose a systemic risk to the economy. In

March 2010, the DTCC Trade Information Warehouse (see Sources of Market


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Data) announced it would voluntarily give regulators greater access to its credit

default swaps database.

Goldman Sachs profited from creating and selling highly rated sub-prime ...These

securities turned to junk and investors lost their money. ... is suing the Korean-based Goldman Sachs executives for selling them fraudulent CDOs. ..... then they

bet against the bonds buying CDS derivatives.

Goldman Sachs did all right from that deal. ... Goldman Sachs executives for

selling them fraudulent CDOs. ....They forced the FASB to accept a rule-change in

the accounting .... to push California into bankruptcy and make those CDS bets pay

off big. ...

By definition a CDS has a short and a long side, so from a purely theoretic

perspective it should have no effect on the price of the ... this point is that the

buyers and sellers of CDOs(and CDS via CDOs) definitely did not ... Here

Goldman is making it clear that no market exists for the Abacus CDO and there is

..

Goldman's Ethical Conflict of Interest: Obviated or Enabled?

According to U.S. Senator Carl Levin, Goldman Sachs profited by taking

advantage of its clients reasonable expectation that it would not sell products that

it did not want to succeed and that there was no conflict of economic interest

between the firm and the customers that it had pledged to serve. Not only was the

bank secretly betting against housing-related securities while selling them to

clients, in at least one case a client shorting such a security was allowed to have a

hand in picking the bonds. What is perhaps most striking, however, is how little

Goldman Sachs has had to pay for acting at the expense of some of its clients. One

might predict on this basis that the unethical culture at the bank is ongoing.

To rebuff Sen. Levins charge, Blankfein retorted that the discounted price on a

given security corresponds to the risk acceptable to the purchasers. However, in

this particular case, the Funds managers further claimed that the Fund would not

have bought the bad deal had they known Goldman employees viewed it as crap

(that the bank was secretly shorting it in proprietary trading would presumably


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have also made a different in the Funds decision to buy), even at the discounted

price. In other words, the risk corresponding to discounted price was understated

by Goldman. For the risk/price relation to work, the information given by the seller

to the buyers must be accurate.

As part of its $550 million settlement with the SEC in July 2010, Goldman Sachs

stated that it acknowledges that the marketing material for the ABACUS 2007-

AC1 transaction contained incomplete information. In particular, it was a mistake

for the Goldman marketing materials to state that the reference portfolio was

selected by ACA Management LLC without disclosing the role of Paulson & Co.

Inc. in the portfolio selection process and that Paulsons economic interests were

adverse to CDO investors. In other words, Goldman admitted that its marketing

material on the security contained a conflict of interest wherein Paulsons

involvement, which was averse to the value of the security, was omitted in line

with Goldmans financial incentive to sell the security. To have obviated the

conflict of interest would have meant less profit. Without a probable loss of much

greater profit upon the discovery of the unethical exploitation of the conflict of

interest, the financial calculus is unavoidably on the sordid side of the equation

and a business is an economic enterprise.

One might wonder if a firm such as Goldman, whose culture condones or looks the

other way when ethical conflicts of interest are acted upon in an unethicaldirection, is eventually to be held accountable by the market if not by a servile

government. It would be sad indeed, or at least enabling, were the market (if not

the government) not to sufficiently penalize the bank for its unethical expediency.

For a business to act unethically with financial impunity is to enable the sordid

conduct and its enabling culture to go on, unfettered.

As an alternative, we might look for moral leadership from CEOs concerning

institutional conflicts of interest. Even if they are not disabled, a moral leader does

not exploit them for financial gain. Such leadership can be relevant, meaning that itcan be in line with the business calculus. In particular, the financial value of a

unsullied reputation can outweigh profits from exploiting a conflict of interest (less

probability-adjusted penalties). In other words, moral leadership can dovetail with

cost/benefit analysis if the time-line is extended sufficiently. As John Fullerton, a

former banker at J.P. Morgan observed, "At its core, Wall Street's failure, and


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Goldman's, is a failure of moral leadership that no laws or regulations can ever

fully address." Fullerton adds to this realistic assessment an implied pessimism

regarding the likelihood of such leadership manifesting (even in sync with the

business calculus) in suggesting that the SEC settlement "is the tipping point that

provides society with an opportunity to fundamentally rethink the purpose offinance." That is, the value of Wall Street itself can and perhaps should be

reassessed relative to business system overall.

The Lawsuit: Securities and Exchange Commission v Goldman Sachs & Co. and

Fabrice Tourre

On April 16, 2010 the Securities and Exchange Commission, in a scathing civil

lawsuit, alleged that Goldman, Sachs & Co as well as its employee, Fabrice Tourre

made materially misleading statements and comissions in connection with asynthetic collateralized debt obligation (CDO), called Abacus 2007-AC1 that it

sold to its investor clients in early 2007. Because the transaction occurred at a time

when the U.S. housing market was beginning to show signs of weakness, the SEC

believed that certain activities and misrepresentations of Goldman and Tourre

constituted misconduct in violation of Section 17(a) of the Securities Act of 1933,

Section 10(b) of the SEC Act of 1934, and Exchange Act Rule 10b-5. (Securities

and Exchange Commission v. Goldman, Sachs & Co., 2010). Collectively, these

federal anti-fraud statutes make transactions that constitute a scheme or artifice todefraud, and other untrue statements or comissions a clear violation for which

liability would attach. (U.S.C. Sec. 77q(a)(The Securities Act); 15 U.S.C. Sec.

77j (b) (Authority: Sec. 10; 48 Stat. 891); 15 U.S.C. 78 (j)).Goldman had

structured Abacus 2007-ACI with Paulson & Co. Inc, a hedge fund notable for

winning huge profits by taking short positions. (Zuckerman, 2010; Teather, 2010).

The marketing materials that Goldman provided to its foreign institutional

investors stated that the underlying mortgages contained in the Abacus investment

were selected by ACA management, an independent third-party whose role it was

to analyze credit risk in mortgage backed securities. Goldman represented that

these were sound investments but at the same time the marketing materials

presented did not disclose that Paulson & Co. Inc. with economic interests directly

opposite to Goldmans clients played a significant role in the selection of the

underlying portfolio mortgages. Paulson was bearish on the housing market and


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helped to choose mortgage backed securities that were expected to experience a

negative credit event and subsequently default. After the Abacus portfolio

selection, Paulson entered into Credit Default Swaps (CDS) and shorted these

securities, essentially betting that the mortgages contained in the Abacus deal

would fail. It was alleged that Goldman may not have disclosed any of thesefacts in the marketing materials provided to its clients, and that this omission was

a statutory violation. (Securities and Exchange Commission v Goldman Sachs &

Co. and Fabrice Tourre, 2010). Furthermore, the SEC claimed that Fabrice Tourre,

who was the Goldman representative on the deal worked directly with Paulson,

personally devised, and marketed the transaction, and misled ACA into believing

that Paulsons interest in Abacus was long and that his interests in the collateral

selection were aligned with ACAs. In point of fact, nothing could have been

further from the truth. (Goldman Sachs & Co.Settlement with the SEC, 2010;SEC. gov 2010, New York Times DealBook, 2010). By January 29, 2008, just 9

months after inception, 99 percent of the portfolio had been downgraded.

According to the litigation, Paulson profited in the amount of 1 billion dollars

while deal investors lost a commensurate amount. Goldmans response in

opposition to the suit was that they were merely mitigating business risk and

operating within a legal zone of business as usual and filed an Answer denying

such accusations. (Jeffers and Mogielnicki, 2010). Nevertheless, in April, 2010 a

settlement was announced, and Goldman agreed to pay a total of 550 million

dollars to defrauded clients and the SEC as well as to review and revise its ethical

policies and procedures. Goldman, in its settlement only admitted to making a

mistake in not disclosing the role of Paulson in the marketing materials.

(Goldman Sachs & Co. Settlement with the SEC, 2010).


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HOW CAN MY BOND BE IN DEFAULT? ITS RATED AAA.

CAN YOU REALLY RELY ON WHAT S&P TELLS YOU.

Goldman Sachs has arguably been the most successful firm on Wall Street for

decades, with some of the world's biggest private equity and hedge funds andinvestment bankers and traders who practically minted money.

The bank was humbled along with the rest of Wall Street in 2008 when thefinancial markets crashed, turning itself into a commercial bank holding companyand surviving the meltdown with federal assistance. In 2009, it led the Street'sresurgence and was the first to seek to pay back its bailout money. But its hardballtactics and supersized profits drew new scrutiny and criticism.

And in April 2010, the bank was accused of securities fraud in a civil suit filed by

the Securities and Exchange Commission that claimed the bank created and sold amortgage investment that was secretly devised to fail. The move marked the firsttime that regulators have taken action against a Wall Street deal that helpedinvestors capitalize on the collapse of the housing market. Goldman later paid asettlement $550 million in 2010 to settle accusations that it had misled investorswho bought the Abacus mortgage security.

Goldmans biggest challenge may well be the public relations blows resulting fromthe crisis. It was called a great vampire squid by Rolling Stone and denounced inCongress. The damage to its reputation could take years to repair.

A reminder of those issue came in April 2011, when a 650-page report on thefinancial crisis published by the Senate Permanent Subcommittee on Investigationsoffered the stark conclusion that Goldman Sachs executives had not told it tell thewhole truth about whether they bet against the mortgage market in 2007 and 2008.

With the settlement, no other Goldman employees have been named other thanFabrice Tourre, a midlevel banker who the S.E.C. accused of misleading clients.

In June, though, the bankreceived a subpoena from the office of the Manhattandistrict attorney, which is investigating Goldman's role in the financial crisis,according to people with knowledge of the matter.

Senator Carl Levin, Democrat of Michigan, who headed up the Congressionalinquiry, had sent his findings to the Justice Department to figure out whetherexecutives broke the law. The agency said it was reviewing the report.
http://www.nytimes.com/2010/07/16/business/16goldman.htmlhttp://www.nytimes.com/2010/07/16/business/16goldman.htmlhttp://topics.nytimes.com/top/reference/timestopics/people/t/fabrice_tourre/index.html?scp=1-spot&sq=fabrice%20tourre%27&st=csehttp://dealbook.nytimes.com/2011/06/02/goldman-receives-subpoena-over-financial-crisis/?hphttp://dealbook.nytimes.com/2011/06/02/goldman-receives-subpoena-over-financial-crisis/?hphttp://topics.nytimes.com/top/reference/timestopics/people/t/fabrice_tourre/index.html?scp=1-spot&sq=fabrice%20tourre%27&st=csehttp://www.nytimes.com/2010/07/16/business/16goldman.htmlhttp://www.nytimes.com/2010/07/16/business/16goldman.html


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GOLDMAN AND THE FINANCIAL CRISIS

When the housing bust began to take its toll on Wall Street, Goldman seemed to bethe firm best positioned to weather the storm. In 2007, a year when Citigroup andMerrill Lynch cast out their chief executives, Goldman booked record revenue andearnings and paid its chief, Lloyd C. Blankfein, $68.7 million the most ever fora Wall Street C.E.O.

And as 2008 progressed, Goldman appeared to persevere through deepeningeconomic crisis that consumed rivals Lehman Brothers and Merrill. In September,the company reported modest, though diminished, profits for the third quarter,beating expectations.

But the company was not invincible, as the credit crisis escalated later that month.American International Group, an insurance giant facing collapse due to itsexposure to the mortgage crisis, was Goldman's largest trading partner. WhenA.I.G. received an emergency $85 billion bailout from the federal government,

jittery investors and clients pulled out of Goldman, nervous that stand-alone

investment banks even one as esteemed as Goldman might not survive.Company shares went into a free fall.

On Sept. 21, in a move that fundamentally changed the shape of Wall Street,Goldman and Morgan Stanley, the last major American investment banks, askedthe Federal Reserve to change their status to bank holding companies. Goldmanwould now look much like a commercial bank, with significantly tighter


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regulations and much closer supervision by bank examiners from severalgovernment agencies.

The radical shift represented an assault on Goldman's culture and the core of itsastounding returns of recent years.

Goldman received $10 billion from the federal government as part the Bushadministration's $700 billion rescue of the financial industry. Goldman alsobenefited from an indirect subsidy adopted by the federal government that allowsthem to issue their debt cheaply with the backing of the Federal Deposit InsuranceCorporation. It was the first bank to take advantage of the debt program when itwas introduced in November, when the financial crisis made it nearly impossiblefor companies to raise cash. The program will continue to bolster scores of banksthrough at least the middle of 2012.

A SENATE GRILLING

Politicians like nothing more than a convenient foil, and in April, 2010 Democratsstill locked in a stubborn impasse with Republicans over new rules to govern WallStreet believed they had found a gold-plated one in Goldman Sachs.

In an April 27 hearing, members of the Senate Permanent Subcommittee on

Investigations interrogated Goldman's mortgage men for over 10 hours, puttingthem on the spot over Wall Street's questionable conduct at a legislativelypropitious moment.

Through the day and into the evening, Goldman Sachs officials met withconfrontation and blunt questioning as senators from both parties challenged themover their aggressive marketing of mortgage investments at a time when thehousing market was already

Mr. Blankfein was pressed on the deal at the center of the S.E.C. case. He said the

investment was not meant to fail, as the S.E.C. claims, and in fact, that the dealwas a success, in that it conveyed "risk that people wanted to have, and in a marketthat's not a failure."

To which Senator Jon Tester, Democrat of Montana, replied, "It's like we'respeaking a different language here."


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GOLDMAN SACHS IS FILLED WITH POLITICIANS, THAT MUST

MAKE IT EASY TO GET FAVOURABLE LAWS PASSED

Hank Paulson

He joined Goldman Sachs in 1974, working in the firm'sChicago office under James P. Gorter. He became a partner in

1982. From 1983 until 1988, Paulson led the Investment

Banking group for the Midwest Region, and became

managing partner of the Chicago office in 1988. From 1990 to

November 1994, he was co-head of Investment Banking, then,

Chief Operating Officer from December 1994 to June 1998;

eventually succeeding Jon Corzine as chief executive. His

compensation package, according to reports, was $37 millionin 2005, and $16.4 million projected for 2006. His net worth has been estimated at

over $700 million.

In January 2003, Paulson was criticized for stating, "I don't want to sound

heartless, but in almost every one of our businesses, there are 15 to 20 percent of

the people who really add 80 percent of the value. I think we can cut a fair amount

and not get into muscle and still be very well-positioned for the upturn." He later

issued an apology to all of the company's employees via voice-mail.

Paulson was nominated on May 30, 2006, by U.S. President George W. Bush to

succeed John Snow as the Treasury Secretary. On June 28, 2006, he was confirmed

by the United States Senate to serve in the position. Paulson was officially sworn

in at a ceremony held at the Treasury Department on the morning of July 10, 2006.

Many people wondered how he would react to going from one of the highest paid

men in America to a civil servant. However taking the job as treasury secretary

turned out to be the best move Paulson would ever make. As a mandate for taking

public office he could not hold any shares in the sector he regulated i.e. he had tosell all his shares in Goldman Sachs, in order to be impartial. As it turns becoming

treasury Secretary was the best decision he ever made. He received $ 500 million

and thanks to a law passed by the earlier George Bush he was not required to pay

any taxes on this money. Just a year later the entire market collapsed and his shares

would not even have been worth a quarter of that amount.


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Another interesting thing to note is that virtually the entire US Treasury

Department was stacked with ex-Goldman Sachs employees. They literally ran the

treasury department. The picture shown below gives us a more definitive idea of

how bad the situation is. A congresswoman said the treasury department is an arm

of wall street. An economist said We call it Government Goldman in the modernera. At the end of his speech Hank Paulson says I think we saw the best of the

United States in the speakers office tonight. As filmmaker Michael Moore points

out its actually the best of Goldman Sachs.

The crucial point here is the bailout. As is common knowledge by now the US

financial services companies went bankrupt in September 2008, at which pint

Paulson was still the treasury secretary. He urged the treasury to issue $ 700 billion

to bail out these companies. Now there are two problems with this approach.

Firstly when Paulson was CEO of Goldman Sachs he had presided over the largest

issue of Junk CDOs, perhaps I should also mention that many of them were sold

to retirement funds which are prohibited from investing in any bonds except forthose rated AAA so as to avoid default. Just think he robbed senior citizens of their

life savings. These were specifically designed to make them millions of dollars

when their clients lost the same amount. Secondly instead of having AIG negotiate

a reasonable price to pay on the Credit Default Swaps he issued $ 170 billion to

AIG on the condition that they pay 100 cents on the dollar to the holders of such


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failure could result in the full scale dismantling of the nations financial

infrastructure. Which did eventually happen. He served as a board member on

Citigroup for 8 years and he received in exchange $ 126 million in bonuses and

stock.

Guess what where else he worked? Goldman Sachs for 26 years. He served as co-

chairmen from 1990-1992.

Goldman Sachs employees also regularly used the services of prostitutes. Apart

from the moral and ethical implications of that (they would use a prostitute and

then have no problems going home to their wives), consider the financial

implications. These expenses were as high as 5% of the firms total revenues. They

were written off to entertainment expenses, computer repair, trading research. The

price a whopping $ 1000- $ 1600 per hour, add service tax. Wow.


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Lloyd Blankfein

Blankfein earned a total of $54.4 million in 2006 as one

of the highest paid executives on Wall Street. His bonus

reflected the performance of Goldman Sachs, whichreported record net earnings of $9.5 billion. The

compensation included a cash bonus of $27.3 million,

with the rest paid in stock and options. While CEO of

Goldman Sachs Group in 2007, Blankfein earned a total

compensation of $53,965,418, which included a base

salary of $600,000, a cash bonus of $26,985,474, stocks

granted of $15,542,756 and options granted of $10,453,031.

Blankfein was named as one of "The Most Outrageous CEOs of 2009" by Forbesmagazine. Taking a different position, Financial Times, which named Blankfein as

its "2009 Person of the Year," stated: "His bank has stuck to its strengths,

unashamedly taken advantage of the low interest rates and diminished competition

resulting from the crisis to make big trading profits." Critics of Goldman Sachs and

Wall Street have taken issue with those practices.

On January 13, 2010, Blankfein testified before the Financial Crisis Inquiry

Commission, that he considered Goldman Sachs's role as primarily a market

maker, not a creator of the product (i.e., subprime mortgage-related securities).

Goldman Sachs was sued on April 16, 2010 by the SEC for the fraudulent selling

of a collateralized debt obligation tied to subprime mortgages, a product which

Goldman Sachs had created.

With Blankfein at the helm Goldman has also been criticized "by lawmakers and

pundits for issues from its pay practices to its role in helping Greece mask the size

of its debts." Blankfein testified before Congress in April 2010 at a hearing of the

Senate Permanent Subcommittee on Investigations.[improper synthesis? He saidthat Goldman Sachs had no moral or legal obligation to inform its clients it was

betting against the products which they were buying from Goldman Sachs because

it was not acting in a fiduciary role.


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IF YOU DONT HELP THE WORLD WILL CEASE TO EXIST:

WE NEED A BAILOUT

AMOUNT RECEIVED DURING BAILOUT

GOLDMAN SACHS collected nearly $3bn (1.9bn) from bailed-out US insurer

American International Group (AIG) as a payout on bets it placed on its own

account with the bulk coming directly from taxpayers after AIG's rescue.

The revelation was made in the Financial Crisis Inquiry Commission (FCIC) report

into 2008's financial meltdown.

According to the US government-sponsored FCIC, AIG's $182bn bailout was

necessary because the insurer's collapse threatened "cascading losses and

collapses" throughout the financial system.

Goldman received $12.9bn of the bailout funds a move that drew heavy criticism

and allegations of cronyism. The then treasury secretary, Hank Paulson, had

previously been Goldman's chief executive.

Much of that money went to Goldman clients. The FCIC breaks down exactly how

much Goldman itself received and showed it got $2.9bn for "proprietary trades"

trades made on its own account.

Of those funds, $1.9bn was paid after AIG had received its enormous taxpayer

bailout.

"Thus, unlike the $14bn received from AIG on trades in which Goldman owed the

money to its own counterparties, this $2.9bn was retained by Goldman," the report

states. Wall Street sources strongly disagreed with the FCIC's characterization of

the Goldman transactions.


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PAYBACK PLANS OF BAILOUT

Goldman announced that it will return $10 billion in bailout money by first

offering $5 billion through an equity offering. The bank also announced that itmade $1.81 billion in profits in the first quarter.

A New York banking attorney said Treasury pressed Goldman to accept a capital

injection from the government against its will, in part, to encourage other banks to

participate. He added that Treasury sought Goldman's participation so that other

banks would agree to accept allocations without fearing that it would portray them

in a negative light.

As a result, Treasury and Goldman's primary regulator, the Federal Reserve, couldseek to delay its repayment for fear of how the effort might be perceived by

investors of other large financial institutions, such as Bank of America Corp and

Citigroup Inc. which may not be in a position to pay back the funds.

The government's response will vary depending on stress tests bank regulators are

performing on financial institutions expected to be completed in a couple weeks.

A provision in the American Recovery and Reinvestment Act, which was approved

in February, impedes Goldman and other financial institution recipients of bankbailout funds ability to return capital. The statute requires Treasury to negotiate

with each bank's primary regulator before it approves a repayment.

However, some banking attorneys believe that Goldman's ability to return the bank

bailout funds would be embraced enthusiastically by Treasury Secretary Timothy

Geithner and other bank regulators.

Goldman Sachs and It's Scams - Bk Rprt

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