AIG eyes action on Goldman over CDOs

A

ASusilovic

AIG, the US government-controlled insurer, is considering pursuing Goldman Sachs over losses incurred on $6bn of insurance deals on mortgage-backed securities similar to the one that led to fraud charges against the US bank.

AIG’s move over the deals that caused it a loss of about $2bn is a sign that Friday’s decision by the Securities and Exchange Commission to file civil fraud charges against Goldman could spark actions from investors who lost money on mortgage-backed securities.

If AIG and others discover that their transactions had disclosure issues similar to those alleged in the SEC charges, they would be able to complain to the SEC, file a private lawsuit, or both, lawyers said.

People close to the situation said that AIG was reviewing deals to insure $6bn-worth of Goldman’s collateralised debt obligations in the run-up to the crisis. They added that AIG had yet to decide whether to take action. AIG and Goldman declined to comment.

http://www.ft.com/cms/s/0/db7dc52a-4bee-11df-a217-00144feab49a.html
 
April 19 (Bloomberg) -- The regulator suing Goldman Sachs Group Inc. for fraud should widen its probe to determine whether securities backed by bailed-out insurer American International Group Inc. were improperly created, said two lawmakers.

It is “not beyond the realm of comprehension” that Goldman Sachs misled investors on collateralized debt obligations apart from the one cited last week by the Securities and Exchange Commission, Democratic Representatives Elijah Cummings and Peter DeFazio said in a letter to be sent to SEC Chairman Mary Schapiro. AIG, rescued by the U.S. in 2008, insured about $6 billion of Goldman Sachs CDOs named Abacus.

“Should any of these transactions be found to include fraudulent conduct, any resulting contractual payments from AIG- issued credit-default swaps could be viewed as ill-gotten gains,” Cummings and DeFazio wrote. “It is imperative that the SEC pursue the recovery from Goldman Sachs of any fraudulently obtained AIG payments.”

The lawmakers’ demand adds pressure on New York-based Goldman Sachs as European politicians increase scrutiny of the bank. Prime Minister Gordon Brown called yesterday for a probe by the U.K. Financial Services Authority and Germany’s financial regulator asked the SEC for details of its suit.

Goldman Sachs failed to disclose to investors of a CDO called Abacus 2007-AC1 that hedge fund Paulson & Co. helped pick the underlying assets and bet against the security, according to the SEC suit. The SEC charges are “completely unfounded in law and fact,” Goldman Sachs said on April 16.

John Nester, a spokesman for the SEC, didn’t immediately return a call seeking comment. Mark Herr, a spokesman for New York-based AIG, declined to comment.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=azAAx1Rr.OxY
 
we're entering an era where successful businesses will be targeted and sucked dry, we're entering the era of rewarding failure, we're entering the era of statism, I expect some GS retaliation....
 
For AIG to take action against GS, they would have to roll out the guy who was GS's useful idiot at AIG - Joe Cassano.

Do they really want to do that?
 
Quote from Alexandre:

we're entering an era where successful businesses will be targeted and sucked dry, we're entering the era of rewarding failure, we're entering the era of statism, I expect some GS retaliation....
More...

How is GS the Pinnacle of success when they had the United States treasury secretary next to bush begging for Bailouts and Tarp.

All those AIG bailouts were used to make GS whole on a butt load of swaps.
 
Quite right. And why do you think that is? Because TARP money or the "nanny state," backstopped them and all of their counterparty's

Quote from Blotto:

Quite right. Notice how all the firms reporting record profits in Q1 2009 were all AIG counterparties?
More...
 
Quote from Alexandre:

we're entering an era where successful businesses will be targeted and sucked dry, we're entering the era of rewarding failure, we're entering the era of statism, I expect some GS retaliation....
More...

Which successful businessmen are being targeted?
 
Quote from ASusilovic:

April 19 (Bloomberg) -- The regulator suing Goldman Sachs Group Inc. for fraud should widen its probe to determine whether securities backed by bailed-out insurer American International Group Inc. were improperly created, said two lawmakers.

It is “not beyond the realm of comprehension” that Goldman Sachs misled investors on collateralized debt obligations apart from the one cited last week by the Securities and Exchange Commission, Democratic Representatives Elijah Cummings and Peter DeFazio said in a letter to be sent to SEC Chairman Mary Schapiro. AIG, rescued by the U.S. in 2008, insured about $6 billion of Goldman Sachs CDOs named Abacus.

“Should any of these transactions be found to include fraudulent conduct, any resulting contractual payments from AIG- issued credit-default swaps could be viewed as ill-gotten gains,” Cummings and DeFazio wrote. “It is imperative that the SEC pursue the recovery from Goldman Sachs of any fraudulently obtained AIG payments.”

The lawmakers’ demand adds pressure on New York-based Goldman Sachs as European politicians increase scrutiny of the bank. Prime Minister Gordon Brown called yesterday for a probe by the U.K. Financial Services Authority and Germany’s financial regulator asked the SEC for details of its suit.

Goldman Sachs failed to disclose to investors of a CDO called Abacus 2007-AC1 that hedge fund Paulson & Co. helped pick the underlying assets and bet against the security, according to the SEC suit. The SEC charges are “completely unfounded in law and fact,” Goldman Sachs said on April 16.

John Nester, a spokesman for the SEC, didn’t immediately return a call seeking comment. Mark Herr, a spokesman for New York-based AIG, declined to comment.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=azAAx1Rr.OxY
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Uh oh.........it is starting. Look for more to come out of this.
 
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