>>According to Bespoke Investment Group, the fraud charges cost Goldman Sachs $14.5 billion in market capitalization as of the close of the market on Friday.
The CDO involved in the Goldman lawsuit cost investors on the wrong side of the trade about $1 billion. Goldman Sachs (GS) is down $25 at the moment, which translates into $14.5 billion of market cap. Are these charges going to cost Goldman $14.5 billion?
>> Reuters’ Felix Salmon minces no words in his assessment [emphasis mine]:
I think that the SEC has the right defendant here. Paulson and ACA are both culpable, but it’s Goldman which was clearly central to the plan of deceiving investors into believing that the CDO was being managed by people who wanted it to make money, when in fact it was being structured by the biggest short-seller in the entire subprime market.
And although ACA should never have been so passive in terms of accepting the names given to it by Paulson, it did reasonably believe, because it was essentially lied to by Goldman Sachs, that Paulson was in the deal to make money on the long side:
>> And Felix Salmon regarding the Abacus Pitchbook:
Here is the Goldman Sachs pitchbook for the Abacus deal in question today. It spends 30 pages talking in great detail about ACA and its qualifications to manage CDOs; it never mentions Paulson.
>> US stock drops as fraud charges hit, via Business Week:
“The Goldman story is pulling the stock market down, and you’re getting a flight to quality into the yen,” said Carol Hurley, a senior market strategist in Chicago at Lind-Waldock & Co., a unit of futures broker MF Global Holdings Ltd. “It’s most definitely weighing on risk sentiment.”
