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Forum Post: More Bailouts on the Way - just when you thought it was all over

Posted 6 years ago on May 29, 2012, 1:12 p.m. EST by krmlei (103) from New York, NY
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More bailouts on the way for derivatives

The Goldman Sachs machine just seems to keep running. Out for international domination, they are gearing for being at the forefront of the world derivatives market. So is it any wonder that the recently passed Dodd-Frank Bill has “regulations” geared to helping them get bailed out if they make risky bets?

While Commodities Futures Trading Commission Chairman Gary Gensler announced his desire to extend regulations stipulated in Dodd-Frank to US firms involved in the international derivatives trading market, he failed to mention that the same bill had been passed with provisions added that would allow derivatives clearinghouses to be bailed out just as banks were back in 2008. This means bets placed by Goldman Sachs in foreign derivatives trading are now being underwritten by the American taxpayer.

The economics crises of 2008 was directly related to the crises of the derivatives market when risky mortgage backed securities flooded the market of which Goldman Sachs was a major player. Those derivatives were based on faulty sub prime loans. When mortgages defaulted and real estate prices began to drop, many financial institutions that held those derivatives also began to tumble leading to financial meltdown. Under the guidance of then Treasury Secretary Henry Paulson (who happened to have previously served as chairman and CEO of Goldman Sachs), the bailouts began and US tax dollars that were collected from average American folk were used to protect the too big to fail banks from collapse.

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