"In fact, we are profitable through the first two months of 2009 and are having our best quarter-to-date performance since the third quarter of 2007. In January and February alone, our revenues excluding externally disclosed marks were $19 billion".
Of course soon thereafter other such news came gushing in from other I-banks (JPMorgan, BOFA, GS..etc etc) and all of them reported major profits in that time frame (first two months of 09). For the layman like me this was utterly puzzling, banks with garbage on their balance sheets suddenly should not, by any logical means, start raking in big profits in a market with ever widening spreads and a ultra tight credit market.
But spending a ton of time reading a ton of, usually useless information, does have its perks when I finally came up on these whistle-blowing bunch of writeups from Zerohedge, there is a followup post on Rortybomb as well.
Basically what Pandit and his clique at the I-banks are upto this time is the following, (I quote in green)
- AIG, knowing it would need to ask for much more capital from the Treasury imminently, decided to throw in the towel, and gifted major bank counter-parties with trades which were egregiously profitable to the banks, and even more egregiously money losing to the U.S. taxpayers, who had to dump more and more cash into AIG, without having the U.S. Treasury Secretary Tim Geithner disclose the real extent of this, for lack of a better word, fraudulent scam. (this happened in the jan-early march time frame of 09).
- What this all means is that the statements by major banks, i.e. JPM, Citi, and BofA, regarding abnormal profitability in January and February were true, however these profits were a) one-time in nature due to wholesale unwinds of AIG portfolios, b) entirely at the expense of AIG, and thus taxpayers, c) executed with Tim Geithner's (and thus the administration's) full knowledge and intent, d) were basically a transfer of money from taxpayers to banks (in yet another form) using AIG as an intermediary.
One wonders how much low can this supposedly respectable executives at I-banks stoop to? As I have alluded several times in this blog "Ethics for MBA, often publicized with vigor by B-schools" is an eye-candy meant for mary poppins.
Also to those disgruntled soul(s) who have spammed my mail box/comment section (comment moderation is now on) on the previous post regarding false claims and charges of plagiarism, which I-bank do you work for?