I don't consider myself a
Goldman Sachs (NYSE: GS) conspiracy theorist,
but I know there are legions of them out there, and I
understand where they're coming from. Goldman has money. It
has influence. It has connections. It has talent. Regulators
dictating its future are often Goldman alumni themselves. As
corny as it is, there's some truth to the nickname
"Government Sachs."
Goldman, you'd think, knows this, and would tread softly
around its ties to Washington, avoiding a bigger PR nightmare
than it already has on its hands.
But sometimes it feels like it's purposely launching
fodder at the conspiracy theorists. Case in point: Word
yesterday that it wants to buy tax credits from
Fannie Mae (NYSE: FNM) -- which, we'll remind
you, is almost entirely owned by the U.S. Treasury.
The deal would go something this like: Fannie Mae got its
hands on a bunch of tax credits over the years. But since
it's light years away from profitability, those tax credits,
in Fannie's eyes, are useless. Goldman, on the other hand, is
making money hand over fist. By buying the credits at a
discount to face value, Goldman gets to offset its tax bill,
while Fannie gets cash for an otherwise worthless asset.
Fannie Mae benefits. Goldman Benefits. Everyone's happy.
But whether or not this is a legitimate business
transaction (and it is) means squat to the pitchfork-wielders
that see the situation going down like this:
"Hey,
Treasury."
"Yes, Goldman?"
"Look, we just made an ungodly amount of money thanks to
all the help you've given us over the past year. That means
big taxes. We get irritable when non-bonus money leaves our
bank account, so we've got a plan.
"I'm listening."
"We'll owe you $1.5 billion in taxes next quarter. How
about this: We'll buy $1 billion worth of tax credits from
you for $500 million, and in turn, our tax bill gets cut down
to $500 million. Oh, heck, that's confusing. Let's cut the
middleman out: We rightly owe you $1.5 billion. How about we
just send you a check for $1 billion, we'll all high-five
each other, throw back some shots, and call it even.
Capiche?"*
"Done deal." Continued... |