Smart. Sharp. Funny. Fearless.

Monday, December 09, 2019 {{ new Date().getDay() }}

Washington (AFP) — Goldman Sachs stands to lose money on a multi-million euro loan it made to one of Portugal’s largest banks a month before it collapsed, the Wall Street Journal reported on Tuesday.

The U.S. investment bank made the $835-million loan in July through a Luxembourg financing vehicle it created at a time when Banco Espirito Santo, on the verge of bankruptcy, found it nearly impossible to borrow money directly in capital markets, the newspaper said.

The loan proved to be only a brief lifeline for BES, which was bailed out and dismantled in August. A recapitalization of nearly 5 billion euros was paid for largely with public money.

The Journal said Goldman Sachs would lose money on the previously undisclosed deal.

Quoting a source familiar with the matter, it said the U.S. bank had planned to sell the debt to outside investors but struggled to find buyers.

Goldman Sachs managed to sell part of the debt at a loss to hedge funds specialising in distressed debt but still holds part of the liability, which has lost value, the newspaper said. It did not specify how much the bank stands to lose.

The so-called special purpose vehicle (SPV) used to make the loan is being probed by Portuguese regulators looking at BES’s collapse.

Last month Credit Suisse acknowledged it created SPVs that allegedly allowed the Portuguese bank to keep issuing debt despite its financial woes.

AFP Photo/Mario Tama

Interested in economic news? Sign up for our daily email newsletter!

Photo by expertinfantry/ CC BY 2.0

At this moment, the president of the United States is threatening to "throw out" the votes of millions of Americans to hijack an election that he seems more than likely to lose. Donald Trump is openly demanding that state authorities invalidate lawful absentee ballots, no different from the primary ballot he mailed to his new home state of Florida, for the sole purpose of cheating. And his undemocratic scheme appears to enjoy at least nominal support from the Supreme Court, which may be called upon to adjudicate the matter.

But what is even worse than Trump's coup plot — and the apparent assent of unprincipled jurists such as Supreme Court Justice Brett Kavanaugh — is the Democratic Party's feeble response to this historic outrage. It is the kind of issue that Republicans, with their well-earned reputation for political hardball, would know how to exploit fully and furiously.

They know because they won the same game in Florida 20 years ago.

During that ultimate legal showdown between George W. Bush and Al Gore, when every single vote mattered, a Democratic lawyer argued in a memorandum to the Gore team that the validity of absentee ballots arriving after Election Day should be challenged. He had the law on his side in that particular instance — but not the politics.

As soon as the Republicans got hold of that memo, they realized that it was explosive. Why? Many of the late ballots the Democrats aimed to invalidate in Florida had been sent by military voters, and the idea of discarding the votes of service personnel was repellent to all Americans. Former Secretary of State James Baker, who was overseeing the Florida recount for Bush, swiftly denounced the Democratic plot against the soldiers, saying: "Here we have ... these brave young men and women serving us overseas. And the postmark on their ballot is one day late. And you're going to deny him the right to vote?"

Never mind the grammar; Baker's message was powerful — and was followed by equally indignant messages in the following days from a parade of prominent Bush backers including retired Gen. Norman Schwarzkopf, the immensely popular commander of U.S. troops in the Desert Storm invasion that drove Saddam Hussein's army out of Kuwait. Fortuitously, Schwarzkopf happened to be on the scene as a resident of Florida.

As Jeffrey Toobin recounted in Too Close to Call, his superb book on the Florida 2000 fiasco, the Democrats had no choice but to retreat. "I would give the benefit of the doubt to ballots coming in from military personnel," conceded then-Sen. Joseph Lieberman, Gore's running mate, during a defensive appearance on Meet the Press. But Toobin says Gore soon realized that to reject military ballots would render him unable to serve as commander in chief — and that it would be morally wrong.

Fast-forward to 2020, when many of the same figures on the Republican side are now poised to argue that absentee ballots, which will include many thousands of military votes — should not be counted after Election Day, even if they arrived on time. Among those Republicans is Justice Kavanaugh, who made the opposite argument as a young lawyer working for Bush in Florida 20 years ago. Nobody expects legal consistency or democratic morality from a hack like him, but someone should force him and his Republican colleagues to own this moment of shame.

Who can do that? Joe Biden's campaign and the Democratic Party ought to be exposing the Republican assault on military ballots — and, by the same token, every legally valid absentee ballot — every day. But the Democrats notoriously lack the killer instinct of their partisan rivals, even at a moment of existential crisis like this one.

No, this is clearly a job for the ex-Republicans of the Lincoln Project, who certainly recall what happened in Florida in 2000. They have the attitude and aptitude of political assassins. They surely know how to raise hell over an issue like military votes — and now is the time to exercise those aggressive skills in defense of democracy.

To find out more about Joe Conason and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.