Sunday, November 15, 2009

More Goldman shenanigans on Abacus

Nov. 12 (Bloomberg) -- Goldman Sachs Group Inc. paid off at face value some junior-ranking slices of two collateralized debt obligations at the potential expense of more-senior classes that now are likely to default, according to Fitch Ratings.

Goldman Sachs, the most-profitable securities firm, applied its “sole discretion” to ignore standard payment priority and use cash in reserve accounts for the Abacus 2006-13 and Abacus 2006-17 CDOs to retire lower-ranked notes, Fitch said yesterday in separate statements.

The moves are unusual in that the most senior creditors are typically the first in line to get paid. Fitch analyst Karen Trebach said the use of reserve funds may help cause or add to losses for holders of the CDO’s remaining classes.

“We are not aware of the use of this feature in other transactions we rate,” Trebach said in a telephone interview.

Abacus? Remember this
And financial firms are experts at covering things up. All you had to do was listen to Goldman's disingenuous conference call yesterday. After all, Goldman doesn't use algorithms to screw people, they use an "Abacus!"

Wait--Goldman wouldn't be the put counterparty would they?