GOLDMAN SACHS HIT WITH MORE SUBPOENAS ON ABACUS DEALS

COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary SEE LIVINGLIES LITIGATION SUPPORT AT LUMINAQ.COM

Investigations Launched on Wrongdoing Despite “Settlements”

EDITOR’S ANALYSIS: Maybe there actually is some understanding starting to surface at U.S. regulator’s offices. Certainly the activity in EURO-land shows that our friends across the pond don’t buy the excuses or spin that Goldman and others have been spitting out through their control of key government figures and the media. It is unusual for a case to get “settled” and then still be the subject of investigations. It indicates that regulators are coming into information from whistle-blowers and old-style investigation work that indicates that Goldman’s wrongdoing was not just a civil matter.

Anyone who can get a copy of these subpoenas should send them in to this blog as it will assist everyone in discovery and analysis of their own situation.

The inevitable conclusion here is that the moment pen was put to paper, and the moment that investors transferred funds to the investment bank for purchase of bogus mortgage bonds both the investment and the “loan” were absolutely intended to fail — it was the only way they could make the ungodly amounts of money that were drained out of the U.S. economy.

By process of elimination and recruiting whistle-blowers, the agencies are recognizing the signs of an intentional act, where the loan was intentionally created in defective and deceptive ways, and where the investor’s money was lost the moment he parted with it. The real parties in interest here are the investor-lenders and the homeowner-borrowers. They ALL lost money while the intermediary investment banks mysteriously made tons of money while claiming losses from bad mortgages.

Simple logic tells us that Wall Street’s story can’t be true. If the investment banks lost money from holding toxic assets then there was no securitization — i.e.., the loans were never actually sold, which is what we have been saying here. If that is true, then the investment banks were the lenders, which is exactly opposite from the truth, since we know the money came from investors. If the money came from investors then the investment banks were not the lenders and therefore could not have suffered any loss from unpaid mortgages.

The problem is compounded by the fact that the pools were never filled with assets because transfers were never made. And the transfers were never made because the paper was bad to begin with — the original loans documents described a loan transaction that never took place. And the original loan transaction that DID take place was undocumented in which the borrower was shown one set of documents while the lender was shown a completely different set of documents, neither of which actually described the relationship between the investor-lender and the homeowner-borrower.

As this unravels, Goldman, BOA, Citi, JPM, Chase et al are going to face some tough, unanswerable questions. Where’s the beef?

Goldman Discloses More Subpoenas

By SUSANNE CRAIG

7:02 p.m. | Updated

Goldman Sachs’s mortgage problems are far from over.

The Wall Street investment bank paid $550 million last year to settle a civil fraud suit brought by the Securities and Exchange Commission, which accused Goldman Sachs of creating a mortgage product that was intended to fail.

On Tuesday, the firm disclosed in a regulatory filing that it had received more subpoenas related to that mortgage product, Abacus 2007-AC1, and other collateralized debt obligations that it made during the housing boom.

Goldman has previously revealed that the Financial Industry Regulatory Authority and the Financial Services Authority in Britain are looking into Abacus. The firm said on Tuesday that it had received subpoenas from other unnamed regulators in connection to Abacus and other C.D.O.’s. In a filing in late March, the firm disclosed only that it had received requests for information from unnamed regulators. A subpoena is a more serious step.

The Abacus matter is one of the darkest chapters in Goldman’s 142-year history — the first time that the firm has been accused of fraud. Last July, the bank settled the S.E.C. charges without admitting or denying guilt.

News of the subpoena came in a quarterly filing in which Goldman cut its estimated losses from legal claims by 21 percent. The bank said its “reasonably possible” losses from lawsuits were $2.7 billion at the end of March, down from $3.4 billion at the end of 2010.

This number declined after a handful of major settlements. In one such case, Goldman was among several underwriters of securities offerings by Washington Mutual that were sued in 2008, accused of failing to accurately describe the bank’s exposure to the mortgage market.

Federal regulators seized Washington Mutual in September 2008, making it the biggest bank failure in American history.

Goldman also disclosed on Tuesday that the Commodity Futures Trading Commission was investigating the firm’s role as clearing broker for an unnamed S.E.C.-registered broker-dealer. The firm said it had been “orally advised” that regulators intended to “recommend that the C.F.T.C. bring aiding and abetting, civil fraud and supervision-related charges” against the Goldman unit related to its provision of clearing services to this broker-dealer.

According to the filing, the commission said Goldman knew or should have known that the client’s subaccounts maintained at the firm’s unit “were actually accounts belonging to customers of the broker-dealer client and not the client’s proprietary accounts.”

Neither Goldman nor the Commodity Futures Trading Commission would comment on the case.

Wall Street clearing businesses often find themselves in the sights of regulators. The firms handle billions of dollars in trades and sometimes the clients turn out to be swindlers. Defrauded investors often demand that firms that clear trades for these companies be held accountable. The Wall Street banks assert that their job is simply to clear trades, not police the clients.

In its regulatory filing, Goldman also disclosed that it lost money on just one trading day in the first quarter. And the firm had 32 days when it posted trading revenue of more than $100 million, the filing shows. It is not known on which day Goldman lost money, but the loss was $25 million to $50 million.

After difficult markets took a bite out of profit in the fourth quarter, the first quarter was one of Goldman’s best for trading in a while.

In terms of trading days, it was the best since the first quarter of 2010, when there were no days where Goldman posted a negative trading day. In the period a year earlier, Goldman recorded 35 days when trading revenue exceeded $100 million and it had no day when trading revenue dipped below $25 million.

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20 Responses

  1. [...] Alaska Public Employees Retirement System $61,477,033 Arizona Public Safety Personnel Retirement System 580,815 | $19,811,610 California Public Employees Retirement System 11,096,822 | $378,513,000 California State Teachers Retirement System 15,178,407 | $517,735,463 Fresno City Employees Retirement System 58,828 | $2,006,621 Los Angeles City Employees’ Retirement System 1,292,519 | $44,087,823 Los Angeles County Employees Retirement Association 532,580 | $18,166,000 Merced County (CA) Employees’ Retirement Association 64,744 | $2,208,418 Sacramento County Employees’ Retirement System 384,785 | $13,125,000 Colorado Public Employees’ Retirement Association 4,570,621 | $190,458,000 Connecticut Combined Investment Funds (CIF) $60,967,771 Florida Retirement System – Defined Benefit Pension Plan $503,973,296 Florida Retirement System – Investment Plan $2,115,031 Georgia Teachers Retirement System 5,938,695 $202,568,886 Hawaii ARS (2007Z) $647,000,000 Illinois Municipal Retirement Fund (2008) $56,754,914 Illinois Teachers Retirement System $65,932,720 Indiana Public Employees’ Retirement Fund 866,723 | $29,564,000 Kentucky Retirement Systems – Insurance Fund 206,975 | $7,095,917 Kentucky Teachers Retirement System $81,600,125 Louisiana State Employees Retiremment System 545,450 | $18,605,300 Louisiana Teachers Retirement System 907,616 | $30,958,782 Maryland State Retirement and Pension System 2,750,631 | $93,824,023 Massachusetts Pension Reserves Investment Trust Fund $57,574,000 Minnesota Public Employees Retirement Association $87,100,000 Minnesota Teachers Retirement Association $84,800,000 Mississippi Public Employees Retirement System 2,636,943 | $89,946,126 Missouri Public School Employee Retirement System $55,069,162 New Hampshire Retirement System 380,300 | $12,972,000 New Jersey Division of Pensions and Benefits 6,528,154 | $222,700,000 New Mexico Educational Retirement Board (Pension) 626,331 | $7,445,824 New Mexico Public Employees Retirement Association 917,351 | $31,290,843 New York State and Local Retirement System 15,401,817 | $689,231,311 New York State Teachers Retirement System $430,617,943 New York City Board of Education Retirement System $9,358,727 New York City Employees Retirement System 4,963,319 | $169,298,811 New York City Fire Pension Fund  871,607 | $29,730,515 New York City Police Pension Fund 1,222,183 | $47,384,034 Ohio Highway Patrol Retirement System 20,100 | $633,753 Ohio Public Employees Retirement System (2008) 7,973,895 | $251,416,909 Ohio State Teachers Retirement System 8,033,964 | $274,038,512 Pennsylvania Public School Employees Retirement System 834,000 | $28,454,000 Tennessee State Pension Trust Funds 3,212,775 | $109,587,755 Texas County and District Retirement System $38,100,000 Texas Employees Retirement System 2,875,400 | $124,964,884 Texas Teachers Retirement System $298,274,715 Utah Retirement Systems 1,286,050 | $53,589,704 Utah Retirement Systems 334,405 | $13,934,656 Virginia Retirement System 3,467,525 | $118,277,279 Richmond (Virginia) Retirement System 24,800 | $907,928 Source: http://livinglies.wordpress.com/2011/05/11/goldman-sachs-hit-with-more-subpoenas-on-abacus-deals/ [...]

  2. Funny how Goldman is offering shares of Facebook to Foreign Investors; but NOT U.S. Investors. I am no longer a part of Facebook. Lots of dots to connect….with a LOT of gaps.

  3. Douglas, how are you? I googled WFHET 05-2 enough times over the last three years to make anyone’s head spin. But once I found a deal called “LOCHSONG”. As I said before, it was one of those “shitty deals” that Goldman was dumping on their customers. And “dumping” is what they did. The cover page reads:

    SALISBURY INTERNATIONAL INVESTMENTS, LIMITED (Incorporated with limited liability in the Cayman Islands)
    Series Prospectus
    Series No: 2006-16
    USD 41,000,000 Class M-2 Floating Rate Portfolio Credit Linked Notes Due 2051 issued pursuant to its Secured Note Issuance Programme arranged by

    CITIGROUP GLOBAL MARKETS LIMITED

    Lochsong, Ltd.
    c/o Maples Finance Limited P.O. Box 1093GT
    Queensgate House, South Church Street
    George Town
    Grand Cayman, Cayman Islands

    Lochson, Corp.
    850 Library Avenue, Suite 204
    Newark, Delaware 19711

    Fiscal Agent:
    JPMorgan Chase Bank, N.S.
    (London Office)
    9 Thomas More Street
    London E1W 1YT
    United Kingdom

    SYNTHETIC SECURITY COUNTERPARTY
    Deutsche Bank, AG, London Branch
    Winchester House
    1 Great Winchester Street
    London EC2N 2DB, United Kingdom

    Trustee, Principal Note Paying Agent, Note Paying Agent, Note Transfer Agent and Note Registrar
    JPMorgan Chase Bank, N.A.
    600 Travis street, 50th Floor
    Houston, TX 77002

    IRISH LISTING AND PAYING AGENT
    RSM Robson Rhodes
    RSM House
    Herbert Street, Dublin 2

    Offering Circular by Goldman, Sachs & Co.

    The cast of characters is enough to declare them guilty of something!

  4. Caymens??? You betcha.

    All under deregulation — (Caymens real name?? — “do whatever you want — no one is looking.”

    The really sad part is that this deregulation allowed and perpetrated a siphoning of American homeowner wealth – which was – perhaps, the only glue that was holding a faltering US economy intact. Jobs??? were long given away. Income — top wealth holders hold trillions — enough to easily pay off the US debt. Game-players?? The financial institutions that have controlled Congress for a very long time.

    Capitalism?? long gone. Tickle down?? long gone. Thank Congress for wealth transfer to the top. That is not capitalism.

    Band-aid fixes by Fed Res. But, of course, that is how the “financial crisis” itself was handled.

    What did they not expect?? Did not expect the American people to fight back. (thought was — stupid people — they will never figure anything out).

    But, still need a group effort — a joint voice. Power prevails- despite baby steps forward. .

  5. Usedkarguy , How did you trace your CDO to the Caymens? I swear that is where this is all leading to ,, it’s the one place Wall Street would be comfortable with to hide their YSP dollars.. I know we won’t get through their banking secrecy but we might find a bank or two that is owned by a Wall Street Firm or one of their law firms.

  6. Please God send the criminals to jail !

  7. stopGOVTwaste,

    Very interesting. Thanks. God’s work??? Has to be a joke.

    quote — “The recent sharp rise in fraudulent conveyance actions brought by unsecured creditors has exposed the uncertainty and risks inherent in creditors’ rights coverage.”

    Unsecured??? You betcha.

  8. *they also had “creditors rights” policies on T.I.

    “A decade ago, title insurance underwriters might have agreed on what constitutes a reasonable creditor’s rights underwriting risk. That is not the case today. The recent sharp rise in fraudulent conveyance actions brought by unsecured creditors has exposed the uncertainty and risks inherent in creditors’ rights coverage.

    Previously, title insurers comfortably underwrote creditors’ rights coverage,a form of title insurance that protects lenders from the invalidation of liens under federal or state fraudulent conveyance actions. During the heady days when credit was plentiful, and the real estate market was rosy, creditors’rights coverage was all but a condition of closing.”

  9. Doing God’s work says Blankfein… what an idiot!!!

    http://blogs.wsj.com/marketbeat/2009/11/09/goldman-sachs-blankfein-on-banking-doing-gods-work/

    He was literally brokering “Sachs” of S**t to his clients. If his head wasn’t totally surrounded by his rectum he would see how much of an @sshole he really is! Dimon coming in a close second!!!

  10. Let’s go back to insurance.

    Maybe — reinsurance. Would you believe — PMI is re- insured? .And, big banks have affiliate re-insurers. Of course!!!!.

  11. uprootedone,

    Typical.

  12. Carie

    Do not think so. But, verdict is important because it conveys a position of non-tolerance. .

    The fraud in mortgage loans (not really mortgage loans) — and translates to non-qualifying MBS — is HUGE. Investigations will go on for years —

    And, there is no SOL for fraud upon the court.

    Right now — think US Government officials — should come forward. Those in control – acted too fast – too quickly — to protect all — except those that should have protected — the homeowner victims.

    America??? As once known?? Gone.

  13. My loan trust and derivatives run to a deal called LOCHSONG, a GS&Co CDO^. Cayman Islands owned and sold on the Irish Stock Exchange. How does that work with 40% early default rates?
    Hmmmm….

  14. Good Old Iowa AG Tom Miller..

    Once said “were gonna put people in jail”

    http://swampland.time.com/2011/05/09/foreclosure-probe-chief-asked-bank-lawyers-for-money/

    Our beloved America is bought and paid for..

    Its scary think that one day we will look back and say those were the good old days!

  15. A MUST READ! Wow!!!

    TIME – FORECLOSURE-PROBE CHIEF ASKED BANK LAWYERS FOR MONEY

    A few weeks ago, the National Institute for Money in State Politics published a report showing a marked spike last fall in campaign contributions to Iowa Attorney General Tom Miller by lawyers and law firms that represent big banks after Miller announced he was opening an investigation into the nationwide mishandling of foreclosures by Bank of America, Chase and others.

    On April 20, TIME reported that a lawyer and a consultant for Bank of America, which is in direct negotiations with Miller over its handling of foreclosures, gave a total of $15,000 to Miller’s campaign.

    Now, in response to queries from TIME, Miller says he initiated fundraising calls to several national firms that represent big banks after he had announced his intention to investigate the foreclosure mess. “In September and October, I tried to reach out to people that I’d worked with and I thought had respect for me and potential support for me and tried to raise money from them,” Miller says. “And a number of them were from national firms.”

    You can check out the rest here…
    No wonder why there is NO settlement!
    I think I just broke my keyboard…

    And The Beat Goes On by ” sonny and Cher “

  16. JP MORGAN CHASE STOCK HOLDERS:
    SHARES OWNED & $VALUE OF SHARES:

    (note: figures are several years old, am in the process of updating the numbers)

    *Note: Total of outstanding shares of JP Morgan Chase: 3,950,000,000

    *Note: Total of shares needed to have controlling interest (50.01%): 1,975,000,001

    *Note: Total of outstanding shares owned by all government funds: ?,???,???,???

    The moral of this story is that government is the one raping our economy and manipulating markets in favor of its investment held corporations – especially its banks – and through its bank friendly legislation.

    Alaska Public Employees Retirement System
    $61,477,033
    Arizona Public Safety Personnel Retirement System 580,815 | $19,811,610
    California Public Employees Retirement System (CalPERS) 11,096,822 | $378,513,000
    California State Teachers Retirement System (CalSTRS) 15,178,407 | $517,735,463
    Fresno City Employees Retirement System
    58,828 | $2,006,621
    Los Angeles City Employees’ Retirement System 1,292,519 | $44,087,823
    Los Angeles County Employees Retirement Association 532,580 | $18,166,000
    Merced County (CA) Employees’ Retirement Association 64,744 | $2,208,418
    Sacramento County Employees’ Retirement System 384,785 | $13,125,000
    Colorado Public Employees’ Retirement Association 4,570,621 | $190,458,000
    Connecticut Combined Investment Funds (CIF) $60,967,771
    Florida Retirement System – Defined Benefit Pension Plan $503,973,296
    Florida Retirement System – Investment Plan $2,115,031
    Georgia Teachers Retirement System 5,938,695 $202,568,886
    Illinois Municipal Retirement Fund (2008) $56,754,914
    Illinois Teachers Retirement System $65,932,720
    Indiana Public Employees’ Retirement Fund 866,723 | $29,564,000
    Kentucky Retirement Systems – Insurance Fund 206,975 | $7,095,917
    Kentucky Teachers Retirement System
    $81,600,125
    Louisiana State Employees Retiremment System 545,450 | $18,605,300
    Louisiana Teachers Retirement System
    907,616 | $30,958,782
    Maryland State Retirement and Pension System 2,750,631 | $93,824,023
    Massachusetts Pension Reserves Investment Trust Fund $57,574,000
    Minnesota Public Employees Retirement Association $87,100,000
    Minnesota Teachers Retirement Association $84,800,000
    Mississippi Public Employees Retirement System 2,636,943 | $89,946,126
    Missouri Public School Employee Retirement System $55,069,162
    New Hampshire Retirement System
    380,300 | $12,972,000
    New Jersey Division of Pensions and Benefits 6,528,154 | $222,700,000
    New Mexico Educational Retirement Board (Pension) 626,331 | $7,445,824
    New Mexico Public Employees Retirement Association 917,351 | $31,290,843
    New York State and Local Retirement System 15,401,817 | $689,231,311
    New York State Teachers Retirement System $430,617,943
    New York City Board of Education Retirement System $9,358,727
    New York City Employees Retirement System 4,963,319 | $169,298,811
    New York City Fire Pension Fund
    871,607 | $29,730,515
    New York City Police Pension Fund
    1,222,183 | $47,384,034
    Ohio Highway Patrol Retirement System
    20,100 | $633,753
    Ohio Public Employees Retirement System (2008) 7,973,895 | $251,416,909
    Ohio State Teachers Retirement System
    8,033,964 | $274,038,512
    Pennsylvania Public School Employees Retirement System 834,000 | $28,454,000
    Tennessee State Pension Trust Funds
    3,212,775 | $109,587,755
    Texas County and District Retirement System $38,100,000
    Texas Employees Retirement System
    2,875,400 | $124,964,884
    Texas Teachers Retirement System $298,274,715
    Utah Retirement Systems
    1,286,050 | $53,589,704
    Utah Retirement Systems
    334,405 | $13,934,656
    Virginia Retirement System
    3,467,525 | $118,277,279
    Richmond (Virginia) Retirement System
    24,800 | $907,928

  17. Re. the Raj Rajaratnam conviction today—the US Attorney’s Office issued their own statement:

    “The message today is clear—there are rules and there are laws, and they apply to everyone, no matter who you are, or how much money you have.”

    Let’s see…

  18. I love this post – thanks Neil.

  19. Does anybody know if that HUGE verdict today from Wall Street re. the Rajaratnam hedge fund jerk has any potential ties to mortgage securities fraud?

    GOD, I LOVE IT when these guys get convicted! He paid 45 lawyers a total of 20 million dollars to defend him—but you can’t defend his own (recorded) words!

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