Friday, March 20, 2009

Liveblogging The Goldman Call

Some of the Q&A. FT, Bloomberg and WSJ are ripping David Viniar apart:

Q. How did you treat mark to market dispute and did you do anything in response to noticing improprieties with AIG's marking methodology?

"We believe the value of some positions was lower than they believed. Our response to their weakness was to scale down our trade." [Here comes the MTM can of whoopas at AIG and elsewhere.]

Q. Was it GS's collateral calls that pushed AIG over the edge and does GS feel guilty?

"Had commercial terms, had to protect ourselves, that's why we have collateral terms. there isn't any guilt whatsoever."

Q. GS was biggest counterparty of AIG. Does GS acknowledge that its collateral calls pushed AIG over the edge?

"No. We do not know what the other counterparties were. We just know we called the collateral under our contracts."

Q. Why did GS not alert treasury when it noticed warning signs? How many meetings did Lloyd have with Hank Paulson?

"There were no meetings. Regulators are supposed to regulate. Regulators were posted regularly on what exposure GS had to AIG." [No meetings? Really? This is very easy to be double checked... regardless, another nail in SEC's coffin]

Q. Has there been any discussion of management changes at GS?


Q. Of $4 billion in collateral on synthetics, how much would have been disastrous if had not been paid?

"$2.6 billion at risk from a daily collateral post perspective. $2.6 paid after the bailout" [Despite GS's earlier protests that it was "perfectly hedged" to AIG directly, although not so indirectly].

Q. What is collateral now against full exposure to AIG?

"$4.4 billion in collateral against $6 billion in exposure."

Q. What is P&L on AIG hedges (read CDS GS bought in AIG)

"Net/net gain over time."

Q. Was GS compensation affected by whether collateral was able to be collected.

"Not at all... Goldman was perfectly hedged"

Q. Follow up - Did you tell regulators about their view on how securities should be trading, how collateral should be disputed, i.e. that stuff at AIG was crashing.

"Regulators were posted on collateral, they knew."

Q. What is GS net exposure?

"Roughly 0. If markets move one way we'll put on CDS hedges, if they move the other way, we'll take them off."

Q. Did GS continue to put on AIG CDS after 2006?

"Yes, but very small....really small"

Q. Was GS ever asked to take a discount on its collateral?

"Had ongoing negotiations with AIG. AIG wanted to settle for less than they owed GS. Both before and after September. Not that unusual when negotiating contract transactions." [in fact, happens all the time when dealing with insolvent entities]

Q. Were the bulk of AIG CDS transactions done by end of 2006?

"Almost all was finished by end of 2006. Very little in 2007."

Q. So you had some good visibility on the subprime crisis then didn't you seeing how you stopped buying AIG protection as everyone else was only realizing how bad subprime is?

"We made the right decision at the time." [no comment] Sphere: Related Content
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Anonymous said...

i think the usg should have forceably merged AIG and GS. then they could have had as much collateral as they wanted.