Business

Goldman Sachs accused of civil fraud
by Barbora Misakova

When something bad happens, people tend to look for a culprit and men responsible for that. Usually it is some corporation and in most cases it is one particular person. In connection with housing-bubble collapse in 2007 it is Goldman Sachs and its employee Fabrice Tourre who is allegedly responsible for that. The U.S. Senate panel assailed Goldman Sachs Group Inc on Tuesday. Their conduct during the financial meltdown is seen by Senate as an attempt to profit from 2007 collapse. Fabrice Tourre was charged with deliberately misleading his clients by hiding material information from them. He denied charges and senior managers also said they were not prescient about the housi! ng market. According to subcommittee, Goldman helped to package toxic mortgages into bonds which were repackaged into complex securities known as collateralized debt obligations. In this way Goldman Sachs magnified the risk from the mortgages. By betting on decline of mortgage market through 2007 Goldman Sachs shorted the market and so profit from it. The subcommittee also blamed Goldman for fail to disclose key information to a rating analyst and investors what only demonstrated that Goldman “saw its clients not as valuable customers but as objects for profits.” said Senator Carl Levin, chairman of the permanent Subcommittee on Investigations. Goldman Sachs defends by bank’s residential mortgage bond positions that were losing money daily in December 2006. As Chief Financial Officer David Viniar said, Goldman Sachs had only a small profit from residential mortgages in 2007, and what is more they lost money on them in 2008.

related story (sg! x17111): http://www.france24.com/en/20100427-goldman-sachs-senate-hea...

by Barbora Misakova for Cantell TV (http://cantell.tv)

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posted by Blog TechSource @ 2:57 PM