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Analysis:
Crisis Panel Targets Goldman as AIG Skates By
Reuters - July
2, 2010
by Steve Eder and
Matt Goldstein
The real issue, these critics said, is that Goldman was marking
down valuations on complex securities that it and other banks
had churned out with full knowledge that many were bound to collapse
when the U.S. housing market faltered. [JT Note: In some cases
collateral would have blown up even if the housing market did
not falter.]
"These hearings are a sham," said Janet
Tavakoli,
a Chicago-based derivatives consultant, who has been an outspoken
critic of the role both Goldman and AIG played in the events
leading up to the financial crisis. "They want to make Goldman
the story instead of making this a Wall Street phenomenon."
Tavakoli said there was nothing wrong with depressed marks Goldman
was submitting to AIG in summer 2007. In August 2007 she publicly
questioned AIG's failure at the time to mark down the value of
the CDO securities it had written tens of billions dollars of
insurance-like protection on.
Rather, she said the commission failed to explore the reason
Goldman was marking down the price, which goes to the heart of
the financial crisis.
" What they needed to hold Goldman accountable for was the
underlying assets," Tavakoli said. "The underlying
assets in those CDOs were horrible because of widespread securities
fraud and accounting fraud in the securitization business."
END OF EXCERPT
Janet
Tavakoli is the president of Tavakoli
Structured Finance, a Chicago-based firm
that provides consulting to financial institutions
and institutional investors. Ms. Tavakoli
has more than 20 years
of experience in senior investment banking
positions, trading, structuring and marketing
structured financial products. She
is a former adjunct professor of derivatives
at the University of Chicago's Graduate
School of Business. She is the author of: Credit
Derivatives & Synthetic
Structures (John
Wiley & Sons,
1998, 2001), Structured
Finance & Collateralized
Debt Obligations (John
Wiley & Sons,
2008).
Janet
Tavakoli's book on the global financial meltdown is Dear
Mr. Buffett: What An Investor
Learns 1,269 Miles From
Wall Street (Wiley 2009)
Clients
of Tavakoli Structured Finance
have the benefit of proprietary consultation, which is
not available in any other paid or public forum. Clients
also commission proprietary research and analysis.
TSF
makes some information available to the general public. Please
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