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Curtis</font></b><font face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular"><b><a href="books.html"><br> </a></b></font><font face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular"><b> (310) 204-8700</b></font></p> <p><font size="2" face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular"><i>Copyright Jan..21, 2010<br>All Rights Reserved. </i></font>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </p> <bAbout the Author</u> <p class="MsoNormal"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <span class="style7">C</span>alling the shots on Wall Street, Goldman Sachs Chief Financial Officer David Vinar threw cold water on President Barack Obama s plan to strip the nation s last remaining investment bank of its recent bank holding company status.<span style="mso-spacerun: yes">&nbsp; </span>When Goldman plead poverty Nov. 10, 2008 and filed to become a bank holding company, it did so to get federal cash from President George W. Bush s Toxic Assets Relief Program [TARP].<span style="mso-spacerun: yes">&nbsp; </span>Failed derivative investments caused Goldman Sach s, together with the nation s biggest banks, cash-crunch, driving credit markets to a screeching halt.<span style="mso-spacerun: yes">&nbsp; </span>As a bank holding company under Federal Reserve Board supervision, Goldman Sachs receives cheap loans and bailout money.<span style="mso-spacerun: yes">&nbsp; </span> We re now regulated by the Fed and I expect we will be on a continuing basis, said Vinar, rejecting Obama s plan to strip risky investment banks of bank holding company status.</p> <p class="MsoNormal"> <![if !supportEmptyParas]>&nbsp;<![endif]><span style="mso-tab-count:1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </span>Filing Nov. 10, 2008 to become a bank holding company only had an upside to Goldman Sachs.<span style="mso-spacerun: yes">&nbsp; </span>They could receive bailout money without regulating risky investment strategies, like derivatives.<span style="mso-spacerun: yes">&nbsp; </span>When former President Clinton helped pass the Finanical Services Moderization Act, AKA Gramm-Leach-Bliley, Nov. 2, 1999, it authorized bank holding companies to own or operate brokerage houses, something banned under the 1933 Glass Steagall Act, establishing the Federal Deposit Insurance Corporation and banning bank holding companies from risky stock market investing.<span style="mso-spacerun: yes">&nbsp; </span>Bank officials pressured Congress to reverse Glass Steagall after watching record stock market profits from 1997-2000.<span style="mso-spacerun: yes">&nbsp; </span>Bank holding companies screamed bloody murder watching investors rake in record profits.<span style="mso-spacerun: yes">&nbsp; </span>They wanted a piece of the action, eventually granted under Gramm-Leach-Bliley.</p> <p class="MsoNormal"> <![if !supportEmptyParas]>&nbsp;<![endif]><span style="mso-tab-count:1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </span>Advised by former Fed Chairman Paul Volcker, Obama wants investment banks to no longer take advantage of their status as bank holding companies.<span style="mso-spacerun: yes">&nbsp; </span>Reporting a fourth quarter profit of $4.95 billion, Goldman Sachs profited from TARP bailout funds, receiving over $14 billion from American International Group Insurance [AIG], its major insurer of derivative investments.<span style="mso-spacerun: yes">&nbsp; </span>Barack wants to prevent banks receiving low cost loans or federal bailouts from investing in hedge funds, private equity funds or risky stock market trading that brought about the last financial market meltdown.<span style="mso-spacerun: yes">&nbsp; </span>Questioning the fairness of bailing out investment banks, Volcker wants banks to return to safe investment practices or surrender their holding company status.<span style="mso-spacerun: yes">&nbsp; </span>Goldman Sachs wants it both ways:<span style="mso-spacerun: yes">&nbsp; </span>The security of low cost federal cash and bailouts while engaging in risky investment strategies.</p> <p class="MsoNormal"> <![if !supportEmptyParas]>&nbsp;<![endif]><span style="mso-spacerun: yes">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </span>Vinar blames the crash in the derivative markets on growing defaults and foreclosures on  collaterialized debt obligations. <span style="mso-spacerun: yes">&nbsp; </span> If people are focused on things that caused, or were real contributors to the crisis, it wasn t trading, said Vinar, insisting that risky trading had nothing to do with the financial collapse.<span style="mso-spacerun: yes">&nbsp; </span> Most trading results were actually pretty good, not just at Goldman Sachs but at most firms and that s not really where problems were, denying that speculative derivative trading skyrocketed real estate investments.<span style="mso-spacerun: yes">&nbsp; </span>Vinar wants to blame the financial market crash on unqualified or so-called sub-prime borrowers, not risky investment strategies.<span style="mso-spacerun: yes">&nbsp; </span>Between 1933 and 1999, somehow banks survived without jumping back in the stock market.<span style="mso-spacerun: yes">&nbsp; </span>Goldman Sachs takes no responsibility for risky investments strategies, while, at the same time, jumping at the chance of federal bailouts.</p> <p class="MsoNormal"> <![if !supportEmptyParas]>&nbsp;<![endif]><span style="mso-tab-count:1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </span>Obama finds himself caught between a rock and a hard place, with respect to reining in wild speculation by investments banks. As soon as he suggests curbs on banks, the market sells off.<span style="mso-spacerun: yes">&nbsp; </span>Goldman Sachs, JP Morgan Chase, Citgroup and Bank of America lost 5% on Barack s attempt at regulation.<span style="mso-spacerun: yes">&nbsp; </span> Investment banks and newly minted bank holding companies want the expectations of high market returns, without returning to old fashion ways of making money.<span style="mso-spacerun: yes">&nbsp; </span> Banks will no longer be allowed to own, invest, or sponsor hedge funds, private equity funds or proprietary trading operations for their own profit, unrelated to serving their customers, said Barack, insisting on new regulations for bank depository institutions.<span style="mso-spacerun: yes">&nbsp; </span>Obama no longer wants the federal government bailing out bank holding companies that engage in highly speculative derivative or stock market investing </p> <p class="MsoNormal"> <![if !supportEmptyParas]>&nbsp;<![endif]><span style="mso-tab-count:1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </span>Goldman Sachs and other banks that took billions in TARP funds from bad investments won t comply or acquiesce easily to new proposed regulations.<span style="mso-spacerun: yes">&nbsp; </span>Wall Street reads regulations and government interference.<span style="mso-spacerun: yes">&nbsp; </span>If Wall Street s big players managed their investments responsibly, they wouldn t run to Uncle Sam for bailouts.<span style="mso-spacerun: yes">&nbsp; </span> It s very easy for the president to go on TV and shake a fist, said Mark Calabria, director of libertarian Cato Institute s Financial Regulation Studies. Calabria blames too much government regulation for bedeviling the market.<span style="mso-spacerun: yes">&nbsp; </span> Ultimately, this will have to be worked out by the Congress and it will likely get watered down by Congress and we re not going to see a real solution, skeptical of any real changes.<span style="mso-spacerun: yes">&nbsp; </span>During weak economic times, it s difficult to legislate more controls on a lax financial industry already blaming poor profits on too much government regulation.</p> <bAbout the Author</u> <p class="MsoNormal"> <![if !supportEmptyParas]>&nbsp;<![endif]><span class="style6">About the Author </span> </p> <p class="MsoNormal"> <b>John M. Curtis</b> writes politically neutral commentary analyzing spin in national and global news.<span style="mso-spacerun: yes">&nbsp; </span>He s editor of OnlineColumnist.com and author <i>of <a href="books.html">Dodging The Bullet</a></i> and <i><a href="books.html">Operation Charisma</a></i>.</p> <p class="MsoNormal"> &nbsp;</p> </td> <td width="1" height="2576" rowspan="2"></td> <td width="1" height="2"><spacer type="block" width="1" height="2"></td> </tr> <tr height="2574"> <td width="133" height="2574" valign="top" align="left" xpos="0"><img height="172" width="111" src="images/johninframe3.jpg"></td> <td width="1" height="2574"><spacer type="block" width="1" height="2574"></td> </tr> <tr height="1" cntrlrow> <td width="133" height="1"><spacer type="block" width="133" height="1"></td> <td width="7" height="1"><spacer type="block" width="7" height="1"></td> <td width="182" height="1"><spacer type="block" width="182" height="1"></td> <td width="300" height="1"><spacer type="block" width="300" height="1"></td> <td width="1" height="1"><spacer type="block" width="1" height="1"></td> <td width="1" height="1"></td> </tr> </table> <table border="0" cellpadding="0" cellspacing="2" width="597"> <tr> <td><font size="1" face="Arial,Geneva,Helvetica"> <hr noshade size="1"> </font><a href="index.html"><font face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular" size="2"><strong> Homecobolos</a></strong></font> <div align="left"> <p><font size="1" face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular">This site designed, developed and hosted by the experts at</font><font size="2" face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular"> <a href="http://www.cmeonline.net" target="_blank"><img height="30" width="138" src="images/cmelogoANIM.gif" border="0" align="absmiddle"></a></font></p> </div> <p><font size="2" face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular">©1999-2005 <a href="aboutdiscobolos.html"> Discobolos Consulting Services, Inc.</a><br> (310) 204-8300<br> All Rights Reserved. </font></td> </tr> </table> </center> </body> </html>