American Morning
Goldman under fire
By Ronni Berke and Christine Romans
The Wall Street bank Goldman Sachs has come under a firestorm of criticism lately for expected record bonuses this year, after the government bailout. Goldman, like other banks sold those toxic assets that, in part, pulled the country into recession.
Some are asking: just how much of Goldman's profits come on the backs of U.S. taxpayers?
Goldman's worldwide influence is legendary. Due to a long tradition of public service, the firm's alumni often become top players in government and the world's leading financial institutions. So it was no surprise that when the financial industry almost collapsed sixteen months ago, Henry Paulson, a former Goldman Sachs CEO, as Treasury Secretary, helped push through the $700 billion bank bailout, known as the Troubled Asset Relief Program, TARP.
$10 billion of that went to Goldman. And although the firm paid the money back, the money has become a thorn in Goldman's side. CEO Lloyd Blankfein said, "Had I known it was as pregnant with this kind of potential for backlash, then of course I really would not have liked it."
When the government rescued insurance giant AIG from the brink of failing last year - Goldman Sachs received a full payout of what it was owed - $12.9 billion. Some say Goldman and other banks should have taken a haircut.
"Goldman Sachs has figured out how to take advantage of the guarantee that we have given them to internalize the profit and hold onto it," says former New York Governor Eliot Spitzer.
Spitzer faults Goldman Sachs and other banks for not passing along the benefits of billions in government-backed loans they got at nearly zero interest. For Goldman it amounted to a $21 billion dollar security blanket. Critics claim all of these taxpayer-financed programs allowed the firm to reap bigger profits.
After mounting public backlash, Blankfein apologized. "We participated in things that were clearly wrong and have reason to regret," he told a conference in November. But his mea culpa is not enough for Janet Tavakoli, a structured finance expert who wrote a book in 2003 about collateralized debt obligations – CDO's – complicated investments whose value fell with the housing market.
"Goldman was creating securities along with a lot of other people on Wall Street; these were value destroying securitizations spewing out of their financial meth labs. And today they are trying to pretend they weren't responsible for massive systemic risk."
Goldman Sachs disputes that, priding itself in being a top manager of risk. As far back as 2006, it saw trouble ahead and began selling off mortgage-backed securities. But critics say Goldman continued selling those toxic assets to others, at the same time investing in bets that they were going to tank.
"We never knew at any moment if asset prices would deteriorate further or had declined too much and would snap back," Blankfein said in the firm's defense Wednesday.
Is bigger government better?
By Carol Costello and Bob Ruff
The size and role of government, not surprisingly, has been a popular subject of presidential inaugural speeches.
Remember JFK in 1961? “And so, my fellow Americans, ask not what your country can do for you—ask what you can do for your country.”
And Ronald Reagan 20 years later: “….government is not the solution to our problem; government is the problem.”
Bill Clinton said this in 1993: “It is time to break the bad habit of expecting something for nothing from our government or from each other.”
And one year ago Barack Obama picked up the government theme in his inaugural address: “The question… today is not whether our government is too big or small, but whether it works.”
What’s interesting is that no matter what each man said about government, government itself just kept on growing. Even conservative President George Bush, from 2001 to 2009, presided over the largest dollar increases in regulatory spending in decades, according to George Mason University.
We went over to the Office of the Federal Register in Washington, DC., to the building where the government stores all the books that list and explain every Federal regulation. The rows and rows of packed shelves are testament to the breadth and depth of government involvement in our lives. In 1951 there were just 41 volumes of regulations. Today there are 222 volumes containing 160,000 pages.
We asked Mr. Libertarian, Congressman Ron Paul (R-TX), who ran for president on a platform of small government, what he thought about all this spending and regulation.
“Government always grows,” he told us. “You never see any years where you have less employees (or) the budget actually shrinks. It just doesn’t happen.”
Why does it keep growing?
We Listen – Your Comments 1/20/10
Editor's Note: Results from the Massachusetts senate election enthralled viewers on Wednesday’s American Morning, as many deconstructed the ill-fated loss for the Democrats. Some examined the election from a purely statistical angle, noting that almost 30% fewer votes were cast than in 2008, suggesting the “right was more motivated and showed it.” Others believed independents played the larger role in the election outcome, as the Republican candidate heavily courted the group. Democrats, though, remained steadfast in their support of the president, rebuking claims that the special election was a “referendum for the Republicans,” and against President Obama’s agenda.
- Fred: There has been NO mention of voter turnout. Look at the numbers!! Compared to the 2008 election, 750K fewer votes were cast (almost 30%). Brown won with the same total McCain did in 2008. Obviously the right was more motivated and it showed.
- Chris: The so called Independents that voted Republican are actually recent Republicans that became Independent because they were mad at Republicans. True Independents are socially liberal and conservative on defense, however prefer an intellectual association with the world and cordial relations with the EU.
- Allan: Scott Brown won because the 'Geraldine Ferraro' look alike was weak. She didn't have a 30% lead because of own doing, but was getting the overflow of teddy's office. Massachusetts has their own health care. People everywhere are upset at the crap in the bill and at the end of the bill to appease a few votes. Although Democrats are the only ones pushing the health care bill, they screwed the pooch on it. The Republicans can't claim a win with this, since the Independents voted him in (choice between two opponents -lesser of two evils). But, with Scott Brown in the mix for health care, the Republicans 'might' be able to channel their voice regarding health care through Scott Brown. Right now, if he chooses to ride the fence between the two parties, and follow through with his pledge about the people's seat, then he will have to represent the independents that got him in there. this will make him the most powerful man in politics.....even more so than Obama, Reid, Pelosi, etc. People are pissed. Everyone is voting the incumbents out, no matter who they are. the shenanigans that go on down in DC and their own states, is horrid. Vote all the dip wads out until we get the right mix. People are not going to take it anymore. People realize they don't have representation down there, and too much lobbying, and back room deals have to stop. These politicians have the destiny of America in their hands, and they need to be upright people, not sharks. The recent independent support in Massachusetts should net the Independents a voice in the primaries. Why hasn't this been made a matter of fact.
Desperate need in remote neighborhoods
Relief is finally starting to get to people in Haiti, but there are still entire communities and villages on the outskirts of the capital that are desperate for help. CNN's Jason Carroll visited one of these remote neighborhoods and reports on Haiti's forgotten survivors.
More saved from rubble over a week after quake
People have traveled from all over the globe to be a part of the rescue effort, and that job is far from over. Terry Dejournett, Los Angeles county task force leader and Dennis Cross, fire captain for a Los Angeles county team that's pulled several survivors from the rubble spoke with CNN's John Roberts Wednesday.
Strong aftershock rattles Haitians
Port-au-Prince, Haiti (CNN) - A strong aftershock rocked Haiti on Wednesday morning just as much-needed medical aid was set to reach the earthquake-ravaged nation.
The 6.1-magnitude aftershock was about 6.2 miles deep, with an epicenter about 35 miles (60 kilometers) west-southwest of the capital of Port-au-Prince, the U.S. Geological Survey said.
It rattled people struggling to recover from the devastating 7.0-magnitude earthquake that walloped the impoverished country January 12, killing at least 72,000 people.
Such a strong tremor can pose significant danger in a nation where damaged buildings are teetering precariously. The aftershock was the strongest to hit Haiti since last week's original quake, the USGS said.
The largest aftershock before Wednesday was magnitude 5.9, the agency said.
The 7.0 earthquake was 32 times stronger in terms of magnitude - or energy released - than the 6.1 temblor, said Carrieann Bedwell, a geophysicist with the USGS. That difference is what people feel on the ground, she said.
Patients at a hospital near Haiti's airport in Port-au-Prince immediately started praying as the ground shook like a ship rocking back and forth. They asked for forgiveness and protection, a nurse said.
Read the full story here
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