In a speech before the UK Treasury Select Committee the Chairman of Goldman Sachs Bank, Gerald Corrigan, who also happens to be a former New York Fed President (and people still wonder where Tim Geithner will end up) noted that it is not Goldman who is at fault in the whole Greek swap fiasco but Eurostat, "which was consulted on the transaction at the time it was entered into and which offered no objection." What is troubling is Corrigan's revelation that "Goldman Sachs was by no means the only bank involved with countries in these types of transactions...These transactions were not limited to Goldman Sachs and Greece." Just whose debt numbers will be put under the microscope next?
Corrigan is quoted as saying:
"The personnel at Goldman Sachs consulted with the appropriate authorities at Eurostat, as did, I understand, the government of Greece and there was no indication those transactions were not in line with existing practices. however, adding that "I should also say that those guidelines and standards were modified in 2007, which suggests that perhaps they were more liberal than they should have been back in 2001. "
There is certainly nothing too surprising about this statement. What is more important is that increasing revelations about other countries participations in comparable transactions will only reduce already shaky credibility in the official numbers of not just peripheral countries which may have used such gimmicks to mask their debt exposure, but potentially core eurozone nations, for missing these disclosures for so long. To wit:
"Governments go to some lengths to try to manage their budgetary deficit positions and manage their public debt positions. There is nothing terribly new about this. It is true that currency swaps entered by Goldman Sachs in Greece in the late '90s and early part of the 2000s were of the nature that they did produce a rather small, but nevertheless, not insignificant reduction in Greece's debt-to-GDP ratio at that time. However, it is very clear to me, based on the investigation that I have done over the past few days that those transactions were very much consistent with, and comparable with, the standards of behaviour and legislation used by the European Community. There was nothing inappropriate. Goldman Sachs was by no means the only bank involved with countries in these types of transactions...These transactions were not limited to Goldman Sachs and Greece."
We are fairly confident that the ECB's plan to scapegoat others for its lack of diligence (and outright incompetence) will only backfire, as we have expected ever since revelations about said currency swaps emerged first. And while Corrigan did not name specific countries, the Zero Hedge team is already combing through Portuguese and UK publicly filed SPV documents to see just how much uglier the actual truth is compared to official EU releases.