Goldman Sachs (NYSE:GS) Questioned on Build America Bonds Underwriting Fees

Goldman Sachs (NYSE:GS) has come under fire concerning another issue as Senator Charles E. Grassley, the senior Republican on the Finance Committee, asked in a letter to Chief Executive Lloyd C. Blankfein about the underwriting fees associated with the Build America Bonds, which were supposedly created for the purpose of creating jobs primarily through projects related to infrastructure in the United States.

Grassley said in the letter that there are concerns “that American taxpayers are subsidizing larger underwriting fees for Wall Street investment banks, including Goldman Sachs, as a result of the Build America Bonds program.”

None of this is really relevant of course, as the stimulus has been a gigantic failure in the wake of more data showing we’re still in a recession, and really haven’t ever left it; although it’ll be called a double dip recession in order to make it look like there was a temporary recovery even when there never was.

This is a smokescreen to take the attention of the American people off of the folly of the enormous stimulus package which they didn’t offer, but was offered on their behalf by politicians. What better way to get the focus of the failure off of the politicians than to bring up Goldman Sachs again as a scapegoat for all the government failures and terrible decisions on the economy that have done nothing to stimulate anything, as continuing job losses and cutbacks on spending have proven.

The Build America Bonds program was part of the overall stimulus package. In spite of the failure, the Senate has passed another bill which will increase the program along with its subsidies, which the federal government provides to the tune of 35 percent on the interest payments.

As far as the questions Grassley asked Blankfein in his letter, they referred to the process Goldman Sachs went through to decide on what to charge for fees, how much they are looking to earn on the expanded program, and how much they have earned to date from it.

Here’s what I don’t get: why doesn’t Grassley have this information right in front of him? Do you mean the government simply through the Bonds out there and didn’t take the time to put down the costs related to them? That would be utter incompetence. Well, it’s the government, so that’s not a surprise.

The crux of the matter seems to center around whether or not Goldman has charged more in underwriting fees for the Build America Bonds than they have for other bonds issued that were tax-exempt.

with some of those in the industry publicly writing or commenting on the possibility of large underwriting fees because of the normal practice of the government being lax in its oversight, that has also lent to the circumstance between Grassley and Goldman Sachs, where he seems to be trying to head of the inevitable criticism which will come when taxpayers find out what the fees actually were.

It’s politics as usual and does more to show the ineptness of the government than the practices of Goldman Sachs. Again, why would one of the senior members on the Finance Committee not know about or have in front of him the costs associated with the program? This, to me, is what doesn’t make any sense.