Tuesday, April 14, 2009

BlackRock Confirms Goldman Q1 Profit Was Non-Recurring And A Result Of AIG Unwinds

This is kinda a huge deal... Peter Fisher, managing director of BlackRock (yes, that BlackRock), states in a Bloomberg interview that Goldman's first quarter trading profit is non-recurring in nature, and believes it was mostly due to AIG unwinds... It is a little shocking that BlackRock would have anything bad to say about the phenomenal resurrection of financial companies, and puts the huge "profit" in it's true light. After all PIMROCK are the direct beneficiaries of the perpetuating delusion that all is well with the banking system, so it is odd that a BlackRock professional would dare to go against the grain on this one.

Fully worth a listen (and yes, you need audio for this)

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15 comments:

Anonymous said...

Just listened to it. He said "some of those profits" may have come from the AIG unwinds, which almost certainly must be true. He did not say he thinks "ALL" of them came from AIG unwinds.

Anonymous said...

http://norris.blogs.nytimes.com/2009/04/14/the-case-of-the-missing-month/

Anonymous said...

TD,

The feed is not updating in Google Reader -- not sure if it's an RSS problem or a Google problem. Just thought I'd let you know.

-Mike J

Anonymous said...

I talked to a guy at GS about the missing month, said its not a big deal. MS will do the exact same thing when they report. They DID report Dec, they just made it its own month instead of lumping it in with their new calendar based system and wonking up their new 1Q reporting method.

The DID report Dec.

Tyler Durden said...

feed should be back to normal. advise if not plz

Anonymous said...

When Viniar was asked about whether profits came from the AIG unwind he said:

“I would never tell you that we didn’t book any profit, I
don’t even know,” he said. “I couldn’t tell you with any
counterparty that we booked zero, but I could tell you it
rounded to zero.”

The problem with this is that - I think - that what he is doing is at least misleading, if not honest.

I believe that even though we know that GS was the largest recipient of TARP funds via AIG (+/-$10bn I believe), I think what Viniar is saying is that this money was not a "profit". But their nnumbers would have looked very different had they not booked these revenues in the quarter. He did NOT say there were no revenues from the wind downs, he said no profits - and I believe after reading & listening to his comments that he made this distinction without ever clarifying the line he was drawing.

Anonymous said...

I believe that even though we know that GS was the largest recipient of TARP funds via AIG (+/-$10bn I believe), I think what Viniar is saying is that this money was not a "profit".

///////

Yessiree, Viniar seems to be saying they booked profits on the AIG trades in prior Qs, so there were no profits left to book on receipt of cash from AIG, just a loss if AIG failed to pay. It's like a merchant booking profits from a sale when it acquires a receivable; the merchant doesn't book additional profits when it collects the receivable (ignoring any subsequent interest accrual), just a loss if it becomes partly or fully uncollectible from the debtor.

Robert said...

Tyler (or others) i love the blog, but of everything I read, your's certainly has the most I don't understand. Rather than bore you with questions, do you have any advice I where I can learn about the credit markets and what really drives them, so I can know what you're saying in your daily updates.
Thanks for any help.

Anonymous said...

Martin Armstrong has released a new paper (google him, if you don't know his story)

http://economicedge.blogspot.com/2009/04/martin-armstrong-behind-curtain.html

Very enlightening piece about Goldman Sachs, and the 'Big Game'.

Anonymous said...

BlackRock Solutions is an adviser to AIG with respect to the structured credit book at AIG-FP (providing advice on valuations, market risk / hedging and unwind process). So they are in a position to know what trades were unwound, with who and how far away from "mid".

Julian said...

Hi from Australia All,

I picked this nice little observation up from Jesse's Cafe Ammericain:

What was not reported last night is that Goldman had changed their reporting periods to begin the 1st quarter in January 2009 when they declared themselves to be a bank holding company. Prior to that, their fiscal 2008 year ended on November 30.

This made the month of December 2008 an 'orphan month' that was ignored in the financial headlines.

Goldman took this opportunity to realize some hefty writedowns in that December one month report, to the tune of approximately $1.3 Billion in pre-tax losses.

So, to earn an impressive $1.8 Billion in the first quarter, Goldman disposed of their losses in a largely ignored December filing. This facilitated their share offering with the 'wonderful earnings news' which Matt Miller of Bloomberg referred to approximately every five minutes as "blowing away their numbers."

1.3B eh?...

Jr Accountant said...

Julian,

Well at least GS wrote some of this crap down.

Isn't everyone else clinging to it waiting for Geithner to force them by gunpoint to unload what they can't get rid of under the table?

Clusterf&^k comes to mind.

Anonymous said...

GS are for sure masters of manipulation. Quite hard to believe that someone like Viniar (Executive Officer) would not know for sure if they booked any profits from AIG. It would be something that any officer would be interested in knowing in this type of market conditions.
There is an interesting link that publishes opinions and facts about GS and for sure there is stuff for thought GoldmanSachs666.com

Anonymous said...

Doesn't zero mean that AIG insurance paid off and that there were no losses on $10billion of bad bets?

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