Goldman Sachs WON'T Be Proscecuted For Financial Crisis

"By 2006, Paulson was convinced that the market for subprime RMBS was on the verge of collapse. Unsatisfied with the enormous profits it already expected to make by shorting individual RMBS and other securities linked to residential mortgages,Paulson sought a way to make a billion dollar profit on the failure of a portfolio of RMBS through a single transaction. Paulson did not want to take the short position in just any portfolio of RMBS but in a portfolio of RMBS that it had selected and believed was most likely to default.29. By fall 2006, Paulson had identified the characteristics of RMBS that it expected to default in the near future. Paulson then set out to find an investment bank that would structure, underwrite and sell a synthetic CDO with a reference portfolio including RMBS with such characteristics and broker Paulson’s purchase of protection on that portfolio.30. At least one investment bank that Paulson approached before approaching Goldman Sachs declined to assist Paulson out of concern for its reputation. Scott Eichelof Bear Stearns, who reportedly met with Paulson several times, has been quoted as saying that Paulson wanted:especially ugly mortgages for the CDOs, like a bettor asking a football owner to bench a star quarterback to improve the odds of his wager against the team."

http://www.scribd.com/doc/81902780/ACA-Financial-Guaranty-v-Goldman-Sachs-Amended-Complaint

 

' Thus, on January 4, 2007, as recently disclosed by the Subcommittee,Goldman Sachs approached GSC Partners (“GSC”), an institutional investment manager,to act as the portfolio selection agent for ABACUS. At a meeting the next day, as reflected in an e-mail recently made public by the Subcommittee, Goldman Sachs,Paulson and GSC expressly disclosed that Paulson intended to short the reference portfolio of ABACUS. GSC declined to act as the portfolio selection agent because ABACUS posed “reputational risk” for GSC and the CDO market as whole. Indeed, on February 27, 2007, when Goldman Sachs began to market ABACUS notes, a senior trader at GSC sent an e-mail to the head of Goldman Sachs’s CDO Origination Desk,stating: “I do not have to say how bad it is that you guys are pushing this thing.”. Goldman Sachs Misrepresented to ACA that Paulson’s and ACA’s Economic Interests in ABACUS Were Aligned. As explained in an internal Goldman Sachs e-mail regarding the“ACA/Paulson post,” it was:[Goldman Sachs’s] idea to broker the short. Paulson’s idea to work with a [portfolio selection agent]. [GoldmanSachs’s] idea to discuss this with ACA who could do super senior [wrap] at the same time . . . .. On January 8, 2007, ACAM met with Paulson at Paulson’s offices in NewYork City, where they discussed the proposed transaction, including, among other things,the RMBS to be included in the reference portfolio. In contrast to the candid disclosureto GSC of Paulson’s short interest in ABACUS, Paulson did not disclose to ACAM that Paulson intended to short the reference portfolio."

http://www.scribd.com/doc/81902780/ACA-Financial-Guaranty-v-Goldman-Sachs-Amended-Complaint