The Zacks Analyst Blog Highlights: American International Group, Inc., General Motors Company, The Goldman Sachs Group, Inc.,

The Zacks Analyst Blog Highlights: American International Group, Inc., General
  Motors Company, The Goldman Sachs Group, Inc., Berkshire Hathway Inc., and
                                Morgan Stanley

PR Newswire

CHICAGO, Jan. 14, 2013

CHICAGO, Jan. 14, 2013 /PRNewswire/ announces the list of stocks
featured in the Analyst Blog. Every day the Zacks Equity Research analysts
discuss the latest news and events impacting stocks and the financial markets.
Stocks recently featured in the blog include American International Group,
Inc. (AIG), General Motors Company (GM), The Goldman Sachs Group, Inc. (GS),
Berkshire Hathway Inc., (BRK.B) and Morgan Stanley (MS).


Today, Zacks is promoting its ''Buy'' stock recommendations. Four daily picks
are offered free.

Here are highlights from Monday's Analyst Blog:

What Did TARP Teach Us?

A new television advertisement from American International Group, Inc. (AIG)
shows the company thanking America for the bailout it received from the
Troubled Asset Relief Program (TARP). AIG received a massive $182.3 billion,
$70 billion of which was received from the Treasury and the balance from the
Federal Reserve Bank of New York (FRBNY).

Both the Federal Reserve and the Treasury have already recovered the full
amount from AIG. An additional $22.7 billion of positive return have also been
generated from this exercise. The ad mentions this clearly and thanks the
taxpayer for that too.

However, this campaign may have little effect since it emerged that the
company was considering suing the government for the unfair terms under which
it received the bailout.

The company was considering joining a $25 billion lawsuit by former CEO Hank
Greenberg which claims the terms under which the bailout was provided was
unconstitutional. Following widespread public outrage, the firm has now
decided not to join the lawsuit. However, this has once again brought to the
fore the discontent about TARP, which is close to recouping the amount it
invested in its bailout initiative.

Nearly $418 billion has been spent on the TARP initiative, and the Treasury's
sale of outstanding AIG shares has been a big step in bringing the process to
a close, at least in the collective mind of the public. The other move has
been the Treasury's decision to sell its 32% stake in General Motors Company
(GM) within the next 15 months. Nearly $49.5 billion was injected into the
automaker to keep it from folding.

It is generally being agreed that TARP is a success, but a qualified success
at best. The Treasury has now received $375 billion of the $418 billion it
spent. But these returns could have been greater. All banks and financial
institutions were disbursed funds under identical terms irrespective of their
financial health.

As a result, relatively robust institutions such as The Goldman Sachs Group,
Inc. (GS) paid a 5% annual dividend on the preferred shares that the Treasury
received. This was the same rate at which those with far weaker financial
health received funds.

In contrast,

Berkshire Hathway Inc.



) invested $5 billion in Goldman Sachs September 2008 at 10%. This has
resulted in a profit of $3.7 billion compared to the $1.1 billion positive
return the Treasury has received for the $10 billion that it invested.

The more fundamental issue is whether legislation and monitoring has been
successful at curbing the unhealthy business practices that caused the crisis
in the first place. The New York Federal Reserve has said that with the help
of government support, banks have made some loans that are even more

Additionally, the Dodd-Frank Financial legislation and the Volcker Rule which
was incorporated into it were designed to curb the practice of proprietary
trading. This is a situation where a bank or financial institution invests its
own funds in stocks and bonds instead of using funds received from depositors.
However, the Volcker Rule only restricts short-term investments. JPMorgan
Chase and

Morgan Stanley



) had announced that they would shut down or reduce the size of such units to
comply with these provisions.

But that has not ended the tendency to indulge in risky bets. According to a
report by Bloomberg Businessweek, Goldman Sachs has a unit named
Multi-Strategy Investing that utilizes about $1 billion of the bank's own
funds to make investments. Short-term trades are now defined as those which
last over 60 days or less. An email for a spokesman for Goldman Sachs claims
that this new unit is involved only in long-term investing and lending. The
Bloomberg Businessweek report claims that the unit acts like an internal hedge

The major complaint is that the bailout has done little to aid distressed
homeowners. Only $6 billion was spent on combating foreclosures and the Obama
administration's recent attempt to expand the program has also received little

There is no doubt that TARP pulled the economy back from the brink, but the
wisdom gleaned from this experience must not be forgotten. That will possibly
be its greatest benefit.

Today, Zacks is promoting its ''Buy'' stock recommendations. Four daily picks
are offered free.

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SOURCE Zacks Investment Research, Inc.

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