Goldman Sachs v. United States

Goldman Sachs is looking to buy back the warrants the US Government bought w/in TARP - call me cynical, but I fret the US will get the raw end of this deal.


Posted by Scott at 7/17/2009 02:45:00 PM
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5 comments:

  1. ScottJuly 17, 2009 at 3:03 PM

    A friend linked me to this article a few weeks back:

    http://zerohedge.blogspot.com/2009/06/goldman-sachs-engineering-every-major.html

    It's most likely a result of this article, but I fear the US will not be able to stand up to the bargaining power that is Goldman.

    My main question is, however, where do you see the final settlement? The author of the CNN article guesstimates that the US is looking for $1-1.5B, while Goldman is only offering $500M. Assuming this is accurate, where do you see the final settlement falling? The cynic in me sees it falling short of $1B.

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  2. AaronJuly 17, 2009 at 4:45 PM

    I think the bigger question for me...if I were to get a post-graduate degree and I was offered a job at Goldman Sachs (if they had a San Francisco office), could I turn it down? With the income I could earn to provide for my family, I don't think I could. I wouldn't be doing anything illegal, and it wouldn't be any more scrupulous than a lawyer defending someone accused of murder.

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  3. RoyceJuly 20, 2009 at 10:26 AM

    I have a question for YOU, Scott - why do you think "the US will not be able to stand up to the bargaining power that is Goldman"?

    I believe the final settlement will be determined by the "price arbitration" option discussed in the article. The gov't won't just sell such a valuable asset for no gain, after the big risk of its capital, and Goldman is going to fight for every penny.

    Aaron you just went to crazytown with your question... toss up a link to the Rolling Stone Goldman article so we can discuss it.

    Amusing aside - I just bought that Rolling Stone so I could have the article, and it turns out the Jonas Brothers are on the cover. Awesome.

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  4. ScottJuly 20, 2009 at 1:59 PM

    Go Jonas Bros.!

    I think the majority of my scepticism relates to the Rolling Stone article, which is probably not a good thing considering the heavy anti-GS slant of the article.

    However, after further review with Aaron, I think the US will end up with a decent result from their negotiations/arbitration, although I see arbitration as giving them a lower total since I wouldn't expect GS stock to be valued at $280 come 2016.

    Here's your article lazy arse: http://zerohedge.blogspot.com/2009/06/goldman-sachs-engineering-every-major.html

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  5. RoyceJuly 21, 2009 at 10:10 AM

    I love the Rolling Stones article so much I want to make it its own post. But you sound much more optimistic about the negotiating power now.

    We have no idea what the "arbitration" option involves, correct? We assume it is a neutral third party, but we know nothing about their methodology. My preferred method for this would be to ask a group of investors, "how much would you pay us for these Goldman warrants?", and then use that price to set Goldman's buy-back cost.

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