Tuesday, May 25, 2010
The mess that Wall Street made of itself two years ago wasn’t as complicated to understand as you might think, writes Cenk Uygur, host of The Young Turks, a daily web television talk show.
A lot of the trouble was caused by side bets—high-stakes gambling that some securities would succeed or fail. Those banks and firms that bet wrong, and lost, ended up getting bailed out by the federal government. What really bothers Uygur is that many of those rescued weren’t much different than bookies, and since when were bookies considered vital to the health of the American economy?
Especially troubling were the bailouts to AIG’s partners, such as Goldman Sachs, which received nearly $13 billion for its stakes in the insurance giant that nearly crashed to earth. Goldman hedged its investments in risky mortgages and other securities by taking out the equivalent of failure insurance with AIG. When so many of these investments did in fact fail, AIG didn’t have the money to pay off, so the federal government covered their losses and paid off Goldman Sachs and others. “That’s all taxpayer money,” says Uygur. “All of it went to Goldman for some silly bet they made with a buffoonish company that never had the money in the first place. As ‘sophisticated investors’ they should have realized that AIG never really had the cash to pay them.”
That’s why Uygur wants Goldman to pay back $12.9 billion to the U.S. Treasury. He’s urging Americans to sign a petition calling for Treasury Secretary Timothy Geithner to go after Goldman and get the money back. Those interested in the cause can also partake in a protest scheduled for June 7 outside the Treasury building in Washington, DC.
-Noel Brinkerhoff
Ask Goldman Sachs to Give it Back! (by Cenk Uygur, Young Turks)
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