An interesting disconnect exists between Goldman’s public posture on the SEC’s suit against it over its Abacus 2007 AC1 deal and its private remarks. The firm has maintained that the charges are baseless and politically motivated, and hinted that if there is any dirt here, it must be the fault of Fabrice Tourre, the staffer […]
Read more...By Tom Adams, an attorney and former monoline executive The SEC’s complaint against Goldman Sachs on its Abacus 2007 AC1 transaction may have impact beyond just the facts in that particular deal. The case has touched off a firestorm of reaction across the globe now that a government enforcement agency has dared use words like […]
Read more...Goldman pointed avoided discussing its pending SEC lawsuit directly on its conference call earlier today, but other reports suggest it is taking an even more pugnacious stance than its initial press released indicated. From Politico: Goldman’s crisis strategy…is already clear: An attempt to discredit the Securities and Exchange Commission by painting the case as tainted […]
Read more...By Andrew Dittmer, a mathematician with hedge fund experience, and Richard Smith, a UK based capital markets IT consultant Readers of this blog are by now familiar with the incredible story of how a single hedge fund (Magnetar) managed to play a shockingly extensive role in inflating the housing bubble in 2006-2007. The story was […]
Read more...By Tom Adams, an attorney and former monoline executive, and Yves Smith One issue that continues to puzzle us, in looking at the sudden furor about seemingly duplicitous dealings by investment banks in the real estate related CDO business, is that the focus thus far has been primarily on the investment banks that packaged and […]
Read more...Other shoes are starting to drop on the Goldman CDO front. The Abacus program spawned 25 CDOs, and it was logical to expect other investors and insurers of Abacus CDOs to consider litigation now that the SEC has started down that path. As we pointed out in previous posts, AIG had provided guarantees on some […]
Read more...By Yves Smith and Tom Adams, an attorney and former monoline executive Both the traditional media and the blogosphere have taken an almost obsessive interest in the suit the SEC filed against Goldman last week with regard to one of its synthetic real estate related CDOs, Abacus 2007 AC1. Goldman’s shares and the stock market […]
Read more...By John Bougearel, author of Riding the Storm Out and Director of Financial and Equity Research for Structural Logic “The whole intellectual edifice collapsed.” ~ Alan Greenspan “Blaming individuals [or a few institutions] is no substitute for acknowledging the failure of the whole system.” ~ ` BOE Mervyn King ~ Quotes excerpted from Yves Smith’s […]
Read more...The Wall Street Journal reports that Dutch bank Rabobank has filed a suit alleging that Merrill Lynch engaged in teh same type of behavior as Goldman did with John Paulson, namely, devising a CDO on behalf of a hedge fund who was using it to take a short position, and not disclosing that fact to […]
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Read more...We received a copy of the document via e-mail and assume this is being leaked broadly (which begs the question of whether this was by happenstance or deliberate. The proximity to the filing of the suit suggests the latter). Richard Smith published it on ScribD: Abacus-2007-AC1-INDICATIVE TERMS Update 8:15 PM: Several items jump out. First […]
Read more...Oooh, things are starting to get interesting. A number of journalists and commentators (yours truly included) have taken issue with the fact that some dealers (most notably Goldman and DeutscheBank) had programs of heavily subprime synthetic collateralized debt obligations which they used to take short positions. Needless to say, the firms have been presumed to […]
Read more...Bloomberg reports that Senate Agriculture Committee Chairman Blanche Lincoln is expected to table a proposal to require commercial banks to separate their derivatives operations from their commercial banking activities. The intent is to prevent banks from using cheap deposits to subsidize risky derivatives businesses, and thus eliminate the government backstopping of these activities. This “no […]
Read more...By Tom Adams, an attorney and former monoline executive; Andrew Dittmer, a mathematician who has worked for a hedge fund; Richard Smith, a UK-based capital markets IT consultant, and Yves Smith As described in ECONNED and in later reports by ProPublica, a Chicago-based hedge fund, Magnetar Capital, entered into a program of sponsoring subprime-based CDOs […]
Read more...By Tom Adams, an attorney and former monoline executive One of the ongoing myths of the financial crisis is that investor demand was what motivated the creation of so many bad securities. Banks, journalists and academics have all described the period prior to the crisis as a period of “insatiable investor demand” for things like […]
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