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Prop Trading: How Goldman Sachs Gambles With Your Money

One of the most scandalously delicious ways in which Wall Street cheats taxpayers is through prop trading.  This is good stuff, so stick around.The Federal Reserve loans money to Goldman Sachs at 0.25% interest.  That's not a typo.  Goldman Sachs borrows money interest free from the Federal Reserve.Instead of lending that money to small business, Goldman Sachs takes the free money, and makes stock market bets.  That's all "prop trading" is.  Simple stuff.If Goldman Sachs makes a losing bet (as it did when it gambled with AIG), then we have the Bailouts.  If Goldman Sachs makes a winning bet, it keeps 100% of the profits.  Goldman Sachs, using taxpayer money, made a lot of winning bets in 2009.  Thus, in a week or so, it will start distributing $23 billion to bankers...continue to full post

Full post as published by Crime & Federalism on January 21, 2010 (boomark / email).