Congressmen Elijah Cummings (no, not a porn name D:MD) and Peter DeFazio (D:OR) today directed the SEC to pursue the return of Goldman Sachs's share of the $2 billion AIG paid out on swaps the insurer issued against the Abacus class securities. In addition to punitive disgorgement, the revelation of Goldman's profit on the CDS blows a big hole in Goldman's defense that, "We actually lost $90 million on the deal..."
"It is imperative that the SEC pursue the recovery from Goldman Sachs of any fraudulently obtained AIG payments," Democratic Reps. Elijah Cummings of Maryland and Peter DeFazio of Oregon said in a letter they are circulating on Capital Hill and plan to send to SEC Chairwoman Mary Schapiro. "Should this or any subsequent investigation uncover criminal misconduct, we implore you to refer those matters to the Department of Justice for the appropriate prosecution."
Wait did Goldman generate a profit on the CDS or did it merely generate money when it hedged its exposure with the CDS?
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