SEC Is Probing Goldman's Excess Variation Margin Demands On AIG
Sooner or later it was bound to happen: the SEC is now looking into whether Goldman's over the top variation margin demands on AIG caused an "improper distress" in the mortgage insurance market (not to mention a couple of competitors' bankruptcies here and there). Not that much will come out of it, you see, since the SEC is woefully underfunded to purchase even one copy of any Janet Tavakoli book... Although the fact that they are finally investigating it should be indicative that if you raise enough stink, even the brain dead Wall Street sycophants at the Syndicate Encouraging Corruption will stop watching pornography for a living and for a few short minutes pretend to push a few papers here and there and actually do their pathetic, anaerobic jobs (and bill taxpayers more than appropriately).
On a conference call between Goldman and AIG executives early that year, the Wall Street bank wanted the insurer to pay more than the $2 billion it already paid to cover losses Goldman said it might suffer on complex securities, the paper said, citing AIG documents and an audio recording of the call.
AIG executives wanted some of the $2 billion back, saying Goldman had inflated the potential losses, the paper said, adding the call ended with nothing settled.
Then the world's biggest insurer, AIG insured Goldman's securities. It was bailed out with a $182.3 billion government aid package when the mortgage market-inspired financial crisis struck later in 2008.
Now, the Securities and Exchange Commission is examining whether the demands by banks were improper, the paper reported, citing people briefed on the matter.
"This is the New York Times' third attempt to develop a conspiracy theory about Goldman Sachs and AIG," Goldman spokesman Lucas van Praag said in an email. "The theories are disgracefully contradictory and the 'facts' don't stand up to serious scrutiny."
Way to go Mary. Oh and by the way, did you pay Sergey Aleynikov a few million to shut up yet? Inquiring minds want to know if stealing "market manipulative" secrets from Goldman Sachs is now considered an act of breavery and courage.