February 06, 2008

* Breaking News

Goldman's CMO Liabilities

By Edward Manfredonia
February 5th, 2008

In previous columns, I documented the fraudulent practices of major investment banks in the subprime mortgage collapse. On August 22, 2007, The Black Star News article, “USA: Billionaires Welfare State,” exposed the fraudulent tactics of investment banks and their marketing of CDOs (Collateralized Debt Obligations) and the method by which unscrupulous investment firms cheated unsophisticated home buyers.

My Black Star News columns also showed how the Federal Reserve was intent on bailing out the Wall Street firms, which were responsible for the subprime collapse, by lowering the Fed Funds Rate, the rate at which the Federal Reserve lends money overnight.

On January 4, 2008 I published an online article, “Goldman’s Toxic CMOs” (Collateralized Mortgage Obligations), exposing the fraudulent manner in which Goldman Sachs not only sold its toxic CMOs, but the manner in which Goldman Sachs traded against these CMOs, which Goldman had sold to its customers.

On January 11, 2008, I wrote letters, calling for an investigation into Goldman Sachs’ sales of worthless CMOs to the company’s customers, and sent copies to Christopher Cox, Chairman of the Securities and Exchange Commission; to Anne Nazareth, Paul Atkins and Kathleen Casey, Commissioners of the SEC; to Michael Mukasey, Attorney General of the United States; and to Michael Garcia, United States Attorney for the Southern District of the State of New York. I concluded these letters with this paragraph:


When contacted by The Black Star News for a response regarding Goldman’s liabilities to customers with respect to the CMOs, the Office of the United States Attorney of the Southern District of New York stated: “It is the policy of the United States Attorney neither to confirm or deny the existence of an investigation.”

Likewise, a spokesperson for the Securities and Exchange Commission said:“The SEC cannot confirm or deny the existence or nonexistence of any kind of investigative activity.”

Goldman Sachs did not return a call seeking comments.

On January 29, 2008 the Federal Bureau of Investigation (FBI) disclosed that it, in cooperation with the Securities and Exchange Commission, had initiated investigations into 14 firms for sub prime mortgage fraud and insider trading.

For a fascinating read go here.

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