Finally some good news! Goldman Sachs plans to give back its TARP money, possibly even as soon as next month. This gives us something to ponder about as to why they suddenly want to give back its TARP money. Could it be that they have received an overwhelming amount of criticisms due to the fact that, being as a counter-party of risky bets, Goldman had been the largest recipient of AIG’s government money and they need to revive some reputation since the information had been revealed? Goldman received approximately $12.9 billion dollars in payments and collateral! These collaterals from Goldman and other counter-parties eventually contributed to AIG’s sudden collapse, which then led to the billions of taxpayer dollars fly into the pockets of the big financial companies.
Now, that we’ve seen where some of the criticisms are coming from, let’s focus on another reason why they have a strong urge to return $10 billion back to the government, which is simply the fact that they are able to. They currently have a balance sheet with about $100 billion of available cash, so $10 billion should be affordable and not cause a problem. Of course, if all this plays out as Goldman hopes, it is definitely good news for taxpayers.
Another issue we can focus on is: If Goldman succeeds in returning our money, will others essentially follow? If the plan follows through, it could situate pressure on other companies, specifically the stronger ones, to give back their money.
