Update:The German government has said that it, too, may file a fraud case against Goldman Sachs according to the German press. The German Federal Financial Supervisory Authority will request information from the SEC to decide whether to file a suit. IKB Deutsche Industriebank AG based in Dusseldorf got clobbered by the Goldman CDOs. The German government spent $13.5 billion propping up IKB. The UK was stung too. The mostly government owned Royal Bank of Scotland Plc paid $841 million to Sachs to unwind its position in the Abacus CDO which it acquired with the purchase of ABN Amro in 2007. Prime Minister
Brown said on TV he wants an investigation, and accused Goldman of "moral bankruptcy"--a long way from
"God's work" touted by the cynical Goldman CEO Larry Blankfein [photo]. The twenty-something French trained whiz who created the synthetic security at the heart of the fraud is unavailable for comment. Does it matter that all the players were big boys doing their level best to get on the greed train that was the America housing market?
US Person says, "NOT" Their shenanigans almost crashed the entire US economy, and cost taxpayers billions. Let the hay making begin.
{4.18.10}The chart shows the 16 ton effect of the SEC's civil fraud filing against Goldman Sachs on its stock price. The Goldman case rapidly became a pink elephant as more and more information became common knowledge about the insider deal between trader John Paulson's company, Paulson & Co., and Goldman. The gravamen of the fraud case is that Paulson convinced Goldman to issue collateralize debt obligations (CDOs) made up of bundled subprime mortgages that were tailor made to fail. Paulson then bought credit default swaps insuring the securities against default. When the CDOs failed, Paulson made $3.7 billion. For its part in the alleged fraud, Goldman sold the securities to European banks without telling them of the bond selection by Paulson & Co. The banks lost $1 billion on the deal. Goldman responded to the allegations by saying it was
under no obligation to disclose identities. Yo, ho, ho and a bucket of blood!
