Replies to post #96421 on Tornado Alley (PROG)

[StephanieVanbryce]

Steph, I'm sure AIG uses the Bank to funnel and assist their insurance business. Banking on that level and insurance are comlementary businesses.

Hi Bulldzr .. so are you saying that AIG was or wasn't a bank and/or that it was only a bank for a group of select people, it's insurance client base ?

Yes .. the whole thing smells.

[StephanieVanbryce]

I'm going to read the NPR link right now .......

[SoxFan]

The really disgusting part was Goldman was willing to take much less that 50% on the dollar as their bet with AIG were not asset backed derivitives for the most part but just walking up to the betting window and saying these bonds are going down.

The Feds and Geithner payed them 100% - $14 billion through AIG and another $12 billion in direct funds.

[StephanieVanbryce]

Goldman Sachs charged with fraud by SEC

(Reuters) - Goldman Sachs Group Inc was charged with fraud on Friday by the U.S. Securities and Exchange Commission in the structuring and marketing of a debt product tied to subprime mortgages.

The SEC alleged that Goldman structured and marketed a synthetic collateralized debt obligation that hinged on the performance of subprime residential mortgage-backed securities, and which cost investors more than $1 billion.

It alleged that Goldman did not tell investors "vital information" about the CDO, called ABACUS. This included that a major hedge fund, Paulson & Co, was involved in choosing which securities would be part of the portfolio, and had taken a short position against the CDO in a bet its value would fall.

According to the SEC complaint, Paulson & Co paid Goldman $15 million to structure the CDO, which closed on April 26, 2007. Little more than nine months later, 99 percent of the portfolio had been downgraded, the SEC said.

The SEC said Goldman Vice President Fabrice Tourre was principally responsible for creating ABACUS. It also charged him with fraud.

Goldman, Paulson and Tourre were not immediately available for comment.

Shares of Goldman sank $19.39, or 10.5 percent, to $164.88 in morning trading on the New York Stock Exchange.

(Reporting by Jonathan Stempel. Editing by Robert MacMillan)

http://www.reuters.com/article/idUSTRE63F3JX20100416?feedType=RSS&feedName=topNews