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Blog Post
7/1/2010
Posted by Khan Shoieb
There has been an interesting colloquy of sorts between Commissioners Keith Hennessey and Bob Graham about the purpose of the Commission. Hennessey has decried his colleagues' line of questioning as not relevant to the roots of the crisis as well as the fact that the panel is questioning what he views as two "outliers" in AIG and GS....
Blog Post
7/1/2010
Posted by Khan Shoieb
Thomas has been questioning GS' David Viniar for a good 5 minutes on whether the Federal Government paid Goldman 100 cents on the dollar for AIG contracts that was worth 48 cents on the dollar. In other words, when the government took over AIG and fulfilled AIG's contracts, did GS make the government pay 100 cents on the dollar for contracts that...
Blog Post
7/1/2010
Posted by Khan Shoieb
Brooksley Born is asking GS execs about their derivatives operations. GS is continuing to assert that they integrate their businesses, and don't track derivatives separately, so they wouldn't have any specific information on derivatives...Brooksley Born is asking GS execs about their derivatives operations. GS is continuing to assert that...
Blog Post
7/1/2010
Posted by Khan Shoieb
Bill Thomas, Vice Chairman and Former Ways & Means Chairman, is questioning Goldman's David Lehman on the technical aspects of how GS prices assets. GS is maintaining that they price based purely on what the market says and don't try to manipulate prices. Seems like Thomas is buying it. Thomas then proceeds to implicitly suggest to AIG's...
Blog Post
7/1/2010
By Khan Shoieb
Andrew Forster, AIG's former CFO, explains why he thinks Goldman's aggressive marking down of AIG's assets was mailicously motivated. Forster explains the rationale that Goldman has put forth, which is that prices were based on "other relevant transactions", is flawed because the market wasn't active--there simply weren't other relevant...
Blog Post
7/1/2010
By Khan Shoieb
A big focus of the hearings today will be on the Collateral Call Disputes between AIG and Goldman in the run-up to the crisis. In other words, why did Goldman mark down (price) AIG's Credit Default Swaps so much lower than other peers, coercing AIG into coming up with collateral they didn't have? How did GS lead to AIG's downfall, and thus, AIG's...
Blog Post
7/1/2010
By Khan Shoieb
Today I will be liveblogging Day 2 of the FCIC's hearings. Witnesses are giving their opening statements now. Set to testify in Session 1 (with links to their statements): Steven J. Bensinger Former Executive Vice President and Chief Financial Officer American International Group, Inc. Testimony (PDF) Video --> Andrew Forster Former Senior...
Blog Post
6/30/2010
By Khan Shoieb
Unlike the previous session with AIG's Cassano, this session with Gary Cohn, President of Goldman Sachs, and Craig Broderick, head of credit, market and operational risk, has been particularly dull. The Commissioners have wasted a valuable opportunity to ask more probing questions and discover anything of substance. On questions concerning Goldman...
Blog Post
6/30/2010
By Khan Shoieb
My wireless had been knocked out for several hours, so apologies for the blackout. We are about an hour and a half into Session 3 with Goldman, but before discussing what is going on now I'll briefly discuss the AIG session. Cassano, former head of AIG's Financial Products division, was in charge of creating the financial instruments that...
Blog Post
6/30/2010
Posted by Khan Shoieb
Representatives from AIG are asserting good faith and denying that credit default swaps (CDSs) or over-the-counter derivatives were ever sold without due diligence or with lower underwriting standards. Cassano especially is maintaining that the financial instruments are performing well now under vehicles operated by the federal government. Phil...