Thursday, July 16, 2009


Have you been wondering how it is that Goldman Sachs has managed to incur massive risks in order to realize the billions of trading profits financed by the Goldman "FDIC Carry trade." The same Goldman Sachs that made an emergency conversion to a Bank Holding Company when it stood at the edge og oblivion last September. Thanks to the Zero Hedge blog (thanks for the heads up Monkey Business blog), the following clue has surfaced:

"The clue may come from a February 5 letter by the Federal Reserve to Goldman CAO Sarah Smith. The letter had come in response to GS requests for "temporary exemptions from the application of certain aspects of the Board's Market Risk Rules for state member banks and bank holding companies and the Board's general risk-based capital rules for bank holding companies." Basically through the end of 2009 Goldman is basically using non-traditional. SEC approved VaR models

The letter goes into detail explaining why a bank needs to follow a MRR VaR methodology. Yet what is not made clear is i) why does Goldman need almost a full year of alternative VaR calculation and MRR exemption and ii) what is the protocol for the SEC to enforce VaR compliance when Goldman's ultimate regulator is the Federal Reserve."

Zero Hedge:

GS VaR Request -

Now this may all seem a bit confusing, so Banzai7 News has asked two distinguished commentators to demonstrate, in plain English, the principles behind Goldman's exemption request.

No comments:

Post a Comment