Well, it looks like they “fixed” everything over the weekend.
By fixed, of course, I mean Tony Soprano fixing the race results as opposed to any actual improvement in the economy. Nonetheless, these fixes come much easier to the Gang of 12 than actually doing anything to promote a healthier economy. Heck sometimes G12 members don’t even WANT the economy to improve. Take CIT, for example. Our pals at Goldman Sachs structured a deal to “save” CIT with a $3Bn rescue package. Interestingly, that structure put the taxpayers on the hook for $2.3Bn if CIT fails but it PAYS Goldman Sach $1Bn if CIT files Chapter 11.
Surely you say, Goldman Sachs would never screw the government and US Taxpayers out of $2.3Bn “just” to make $1Bn for themselves? Of course they wouldn’t… Goldman, in fact stands to make BILLIONS because this little government sponded rescue scam bought CIT just enough time on life support to allow Goldman Sachs to form GS Loan Partners a $10.5Bn fund that will make “senior secured loans to companies” just like the ones CIT will no longer be able to service. According to their web-site:
Our focus is on originating loans for mid- to large-sized leveraged and management buyout transactions, recapitalizations, refinancings, financings, acquisitions and restructurings for private equity firms, private family companies and corporate issuers. We will also make opportunistic purchases of senior secured loans in the secondary market. We target high-quality companies with $500 million to $10+ billion of enterprise value; leading market positions; high barriers to entry; well-regarded management teams; and stable, cash generative businesses.
Let’s not forget that Goldman IPO’s CIT with $5.8Bn of investor money just 3 years ago (pocketing a huge fee) and last year got a huge payoff for avising CIT on the sale of its Construction Finance business at the bottom of the market just 8 months before GS predicted that sector would be turning around. GS then rode to the rescue and got the government to put them on life support while they raised $10.5Bn to create a competing operation that could cherry pick CITs top clients while us taxpayers pick up the tab for all the toxic crap that was left. Game, set and match – nice job GS!
I’m not going to tell you to get mad, I’m not going to tell you to write your Congressman because you never do. I’m only going to point this nonsense out as it goes by so…
