Tavakoli Structured Finance president and derivatives expert Janet Tavakoli says Goldman Sachs was the key contributor to the systemic risk posed by AIG's near bankruptcy.
“A Goldman spokesman told me its involvement in AIG’s trades was only as an ‘intermediary,’ but that isn’t even close to the full story,” Tavakoli writes in a note to investors.
"Goldman underwrote some of the CDOs comprising the underlying risk of protection Goldman bought from AIG... and also underwrote many of (the tranches of) CDOs owned by some of AIG’s other trading counterparties.”
By September 2008, Tavakoli notes, Goldman had done approximately $20 billion in transactions with AIG, and its trades made up nearly one-third of AIG’s $62.1 billion in transactions requiring market prices.
“During AIG’s bailout, none of the information about the volume of Goldman’s trades with AIG — or the Goldman CDOs hedged by AIG’s other counterparties — was made public,” Tavakoli says.
Birinyi Associates head Laszlo Birinyi says Goldman Sachs is the most profitable Wall Street firm and is his top stock pick.
“They have a great ability to make money,” Birinyi told Bloomberg.
“It’s also a company where the management and employees have a significant share, and that’s always one of the things people like.”
Goldman Sachs has more than doubled in New York Stock Exchange trading this year after reporting record quarterly profit of $3.44 billion and beating the average analyst earnings estimate for three straight periods.
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