From Reuters, this afternoon:
TARP watchdog probes Goldman CDOs, maybe Blackrock
Tue Apr 20, 2010 1:36pm EDT
WASHINGTON, April 20 (Reuters) - The special inspector general for the government's bailout program said he would probe whether securities sold by Goldman Sachs Group Inc (GS.N) led to losses at AIG and if the American taxpayer was a victim of fraud.
The SEC's charges concern Abacus, a synthetic collateralized debt obligation that hinged on the performance of subprime residential mortgage-backed securities, and which the regulator said Goldman structured and marketed.
According to the SEC, Goldman did not tell investors "vital information" about Abacus, including that Paulson & Co was involved in choosing which securities would be part of the portfolio Paulson was separately betting against.
There are seven deals similar to Abacus for which AIG wrote credit default swaps, according to Neil Barofsky, the special inspector general for the Troubled Asset Relief Program.
Barofsky said he is in touch with the SEC and will possibly coordinate with the Department of Justice "to see if there are cases of fraud and if AIG and as a result, the American taxpayers, were victims of similar types of fraud."
h/t to Zero Hedge...speaking of which...
Criminal Charges Next? Barofsky To Coordinate With DOJ To See If US Taxpayers Were Victims Of Goldman Fraud
Submitted by Tyler Durden on 04/20/2010 13:42 -0500
Earlier we disclosed that finally someone with more than just 4 neurons is going to pursue Goldman; Reuters now confirms that indeed Neil Barofsky is on the case, and, unlike the SEC, may collaborate with the Department of Justice "to see if there are cases of fraud and if AIG and as a result, the American taxpayers, were victims of similar types of fraud." Should he find fraud, and let's not forget that Goldman bought protection on all parties that bought Abacus exposure from it, with a special place in its heart saved for AIG, whose bailout by the US kinda makes all claims that Goldman lost money on its Abacus exposure moot: can someone finally ask Blankfein or Viniar or whoever, how much money Goldman made on its CDS over AIG's exposure in all Goldman underwritten and AIG purchased CDOs? Be it on a total or pro-rata basis. Anyway, we are tempted to believe there may yet be hope that some justice could after all be served: the SigTarp, whose $40 million budget to date, has uncovered more dirt on the US financial system, than the SEC has in its entire history, with its $1 billion a year moneyhole. What is also notable, is Barofsky's disclosure that he is considering an audit of the role of BlackRock in TARP. Dear SIGTARP, while you are doing that, please also investigate why the Federal Reserve is actively managing its Maiden Lane portfolio, presumably via BlackRock, and whether BlackRock is also advising the Fed on managing its $2.5 trillion SOMA holdings, which as was discussed yesterday has a DV01 of $1.5 billion, and is the biggest ticking time bomb at the heart of the US banking system, and just how much any such off-balance sheet hedging costs the US taxpayer.
Criminal charges coming up. There may be blood, finally!