1. Hank Paulson = Democrat
2. Hank Paulson = Former Goldman CEO
3. Hank Paulson executed a rapid takeover of AIG with $85 billion of taxpayer money (gun to their head – takes an 80% stake) and only brought the current Goldman CEO with him to the AIG “negotiations”. The deal requires the breakup of AIG assets (relevant for #10 below).
4. AIG = insurance company (among many other things)
5. Hank Paulson demands a blank check from the American taxpayer to take toxic assets off finance company books. This is the only acceptable method to him – he won’t accept a plan like the one Buffet did with Goldman (# 9 below) which would rebuild capital, gives the institution a 10x effect on the investment vs. a 1 to 1 like buying assets (for every dollar a bank has on its balance sheet in assets, they can lend 10), and it keeps the government out of the business of liquidating assets – the financial institution cleans up their own mess.
(Note: the US government will now own a large chunk of American’s homes.)
6. I saw a broker interviewed by CNBC on the NYSE trading floor. He said that he wanted the market to tank if the house didn’t approve the bailout [to change the opinion of the public who are 10-1 against the bailout]. It didn’t pass, the market tanked, the desired panic was created.
7. Warren Buffet = Democrat
8. Warren Buffet = Barak Obama advisor
9. Warren Buffet = major investor in Goldman Sachs for $5 billion (he said to Maria Bartiromo on CNBC that he would only have made investment if he knew a taxpayer bailout would be approved). He took perpetual preferred shares with a dividend yield of 10%, or $500 million a year. Those dividends take precedence over other payments to common shareholders. Seems like a sweet deal. Why didn’t Paulson consider this approach? Maybe because it doesn’t provide a door for his investment buddies to get their preferred shares, it only helps the taxpayer…?
10. Warren Buffet = insurance company investor (GEICO, General RE, etc.)
11. Warren Buffet = future owner of AIG assets?
12. Warren Buffet is now a major investor in GE - $ 3 billion (terms are similar to those struck with Goldman Sachs). About half of GE’s income comes from their finance division (and they will also get a little taxpayer help?).
I didn’t think I’d see such a blatant Putin-style nationalization of our free market economy. Hank Putin: Trust me, this is a meltdown that no one saw coming, this deal is only way out, and you’ll make the money back later… wink, wink…
13. Warren Buffett owns 9% of Wells Fargo. After the bailout was signed, Wells Fargo jumped in and took away a deal from Citigroup to purchase Wachovia - after Wachovia signed an exclusive agreement with Citigroup. Wells Fargo backed out of a similar deal to buy Wachovia Sunday before the bailout was put into law, so Citigroup and the FDIC put a purchase agreement in place.
Hmmmm.... I wonder how Buffett keep showing up at the financial feeding tough and is able to cut in line for the best morsels?