Criminal Charges Next? Barofsky To Coordinate With DOJ To See If US Taxpayers Were Victims Of Goldman Fraud

Tyler Durden's picture

Earlier we disclosed that finally someone with more than just 4 neurons is going to pursue Goldman; Reuters now confirms that indeed Neil Barofsky is on the case, and, unlike the SEC, may collaborate with the Department of Justice "to see if there are cases of fraud and if AIG and as a result, the American taxpayers, were victims of similar types of fraud." Should he find fraud, and let's not forget that Goldman bought protection on all parties that bought Abacus exposure from it, with a special place in its heart saved for AIG, whose bailout by the US kinda makes all claims that Goldman lost money on its Abacus exposure moot: can someone finally ask Blankfein or Viniar or whoever, how much money Goldman made on its CDS over AIG's exposure in all Goldman underwritten and AIG purchased CDOs? Be it on a total or pro-rata basis. Anyway, we are tempted to believe there may yet be hope that some justice could after all be served: the SigTarp, whose $40 million budget to date, has uncovered more dirt on the US financial system, than the SEC has in its entire history, with its $1 billion a year moneyhole. What is also notable, is Barofsky's disclosure that he is considering an audit of the role of BlackRock in TARP. Dear SIGTARP, while you are doing that, please also investigate why the Federal Reserve is actively managing its Maiden Lane portfolio, presumably via BlackRock, and whether BlackRock is also advising the Fed on managing its $2.5 trillion SOMA holdings, which as was discussed yesterday has a DV01 of $1.5 billion, and is the biggest ticking time bomb at the heart of the US banking system, and just how much any such off-balance sheet hedging costs the US taxpayer.

More from Reuters:

The special inspector general for the government's bailout program said he would probe whether securities sold by Goldman Sachs Group Inc GS.N led to losses at AIG and if the American taxpayer was a victim of fraud.

There are seven deals similar to Abacus for which AIG wrote credit default swaps, according to Neil Barofsky, the special inspector general for the Troubled Asset Relief Program. 

Barofsky said he is in touch with the SEC and will possibly coordinate with the Department of Justice "to see if there are cases of fraud and if AIG and as a result, the American taxpayers, were victims of similar types of fraud."

Barofsky made the comments in response to questions from the ranking Republican on the Senate Finance Committee, Charles Grassley, at a hearing examining the TARP.

Separately, but also in response to questions, Barofsky said he is considering a broader audit of the role of BlackRock Inc BLK.N in TARP.

"We are doing a number of audits that touch on Blackrock's role. And it is an extensive role throughout this financial crisis," Barofsky said.

For example, current audits, including one on Citigroup Inc's C.N asset guarantee program, touch on Blackrock, he said.

"We are considering doing a more overarching audit report on their role throughout the financial crisis."

So yes, something may happen... after about 10 years. In the meantime, Goldman et al will continue to make record profits, representing an ever increasing portion of total S&P Net Income, thanks only to the yield curve, its monopoly in the fixed income derivative market, and its comprehensive REDI suite which every hedge fund manager uses and signs off on some very peculiar "information sharing" waivers. Yet who cares what happens in 2020: by then America will certainly be insolvent.