Tuesday, May 19, 2015

Goldman Sachs TRAIL of Fannie mae action

Goldman Sachs Nearing $1.1 Billion Settlement With U.S. Housing Regulator

Aug 22 (Reuters) - Goldman Sachs Group Inc could pay about $1.1 billion to settle claims from the U.S. housing finance regulator that it sold bad mortgage-backed securities (MBS), the Financial Times reported.

Negotiations between Goldman and the Federal Housing Finance Agency (FHFA) could be concluded as early as next week, the business daily reported, citing people familiar with the matter. (http://on.ft.com/1q2eaOS)
  • Goldman Sachs - SEC charged the firm with defrauding investors by misstating and omitting key facts about a financial product tied to subprime mortgages as the U.S. housing market was beginning to falter. (4/16/10)
    • Goldman Settled Charges - Firm agreed to pay record penalty in $550 million settlement and reform its business practices. (7/15/10)
    • Fabrice Tourre Found Liable - A jury found former Goldman Sachs Vice President Fabrice Tourre liable for fraud relating to his role in a synthetic collateralized debt obligation tied to subprime residential mortgages. (8/1/13)

Goldman Sachs in $3.15 billion settlement with federal regulators

Goldman Sachs  GS 0.83%  has agreed to pay $3.15 billion to repurchase mortgage-backed securities from Fannie Mae and Freddie Mac to settle accusations that it misstated the quality of the investments.

Liberty Mutual Sues Goldman Sachs Over Fannie Mae Stock

By Jonathan Stempel | July 12, 2010

Goldman Sachs Group Inc. was sued by Liberty Mutual Insurance Co. for fraudulently misleading it into buying preferred stock of mortgage financier Fannie Mae that would become “virtually worthless.”

In a lawsuit filed last Thursday in Boston federal court, Liberty Mutual said it deserves to be reimbursed for losses on the $62.5 million of Fannie Mae preferred stock it had bought in late 2007 through offerings underwritten by Goldman.

How Paulson Gave Hedge Funds Advance Word of Fannie Rescue

At the Eton Park meeting, he sent a different message, according to a fund manager who attended. Over sandwiches and pasta salad, he delivered that information to a group of men capable of profiting from any disclosure.
Around the conference room table were a dozen or so hedge-fund managers and other Wall Street executives -- at least five of them alumni of Goldman Sachs Group Inc., of which Paulson was chief executive officer and chairman from 1999 to 2006. 

Back in the summer of 2008, as the financial system teetered on the edge of collapse, no one knew what would happen to the debt-laden mortgage giants Fannie Mae and Freddie Mac—would they be allowed to go under, or would the government come to their rescue? What would become of the shareholders? Trillions rested on the answers to those questions. Oh wait, someone did know. Treasury Secretary Hank Paulson. And he told his hedge fund pals and former Goldman Sachs colleagues. 
That's right—Hank Paulson just randomly told his bros something so sensitive that even a hedge fund manager's lawyer didn't want to touch it.

Whither Fannie and Freddie? A Proposal for Reforming the Housing GSEs

Goldman Sachs guys,

The firms’ collapse confirmed what many analysts had long warned: the traditional GSE structure is fundamentally flawed. The opportunity to pursue private profit backstopped by an implicit government guarantee was an invitation to excess risk-taking. Light regulation failed to reign in the resulting excesses.

Eventually, the former GSEs could themselves become vertically integrated or be bought by banks. Again, however, the key is to allow a long enough transition period for competition to develop across the different activities.

In July and September 2008, taxpayers had to stand behind the GSE debt to avoid the possibility that losses in the event of a default would force banks to recapitalize en masse at a time when markets were already under stress.  The risks to taxpayers and the economy from large portfolios overwhelm any potential economic benefits from the incremental liquidity they might provide to the mortgage market.


Fannie, Freddie Recapitalization Rejected

A top U.S. Treasury Department official suggested the White House wouldn’t allow mortgage titans Fannie Mae and Freddie Mac to rebuild capital, rejecting some advocates’ wishes that the companies would move past being government wards.

At the same time, in a speech delivered at a Goldman Sachs housing-finance conference in New York

As you can see GOLDMAN SACHS had a big part in the 2008 downfall of Fannie Mae, $5 billion paid in fines for GS bad behavior, Now in 2015 the US Treasury and Goldman Sachs are still in bed trying to give banks Fannie's business for free and allow banks to get all the profits and the Taxpayer take the risk!

This is the US Treasury which is run by GS for years, still seems to be the case. It is amazing this is not the story being told!

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