Maybe William K. Black is right when he says that Holder should resign if he doesn't go after some criminal prosecutions for bankers that created toxic CDOs and fraudulently made billions of dollars at the expense of the pubic.
And so we have two stories:
Allstate Sues Goldman Sachs Over Residential Mortgage-Backed Securities
By Karen Freifeld - Bloomberg
Goldman Sachs Group Inc. (GS) was sued by Allstate Insurance Co. over the sale of more than $100 million worth of residential mortgage-backed securities that the insurer claims the bank itself called “junk” and “lemons.”
Allstate asked for damages including the lost market value of the securities, plus principal and interest payments in the complaint filed today in New York state Supreme Court in Manhattan.
The insurer, based in Northbrook, Illinois, has filed similar suits against JPMorgan Chase & Co. over $700 million of mortgage-backed securities the bank sold the insurer; Credit Suisse Group AG (CSGN) units for more than $231 million of the securities; Bank of America Corp.’s Merrill Lynch unit over some $167 million; Citigroup Inc. (C), over more than $200 million; and Deutsche Bank AG (DBK), over about $185 million. Allstate said the banks misrepresented underwriting standards, owner occupancy data and loan-to-value ratios.
Goldman knew these types of securities were “junk,” “dogs,” “crap” and “lemons,” according to today’s suit, which claims the words are Goldman’s own, recently revealed in governmental investigations, to describe them.
Michael Duvally, a spokesman for Goldman Sachs, declined to comment on the suit.
Goldman Sachs said in a quarterly filing last week that Allstate was among entities that “threatened to assert claims against the firm in connection with various mortgage-related offerings.”
Allstate purchased more than $123 million of the securities from April 2006 to March 2007 in reliance on Goldman’s misrepresentations and omissions, according to the complaint.
Read the full story here
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UPDATE 1 - CIFG sues Goldman, M&T over mortgage bonds
NEW YORK, Aug 17 (Reuters) - Bond insurer CIFG Assurance North America [CADEGA.UL] has sued Goldman Sachs Group (GS.N) and M&T Bank Corp (MTB.N) in New York state court, claiming they fraudulently convinced CIFG to insure $275 million in mortgage-backed securities.
CIFG is the latest bond insurer to sue Goldman over mortgage-backed securities that went bad, and the latest to make a similar claim -- that Goldman knowingly sold shaky mortgage bonds to get the risk off its books. ACA Financial Guaranty [ACAFG.UL] sued Goldman in January for similar reasons. [ID:nN06139329]
The suit, filed Tuesday, relates to securities from a portfolio of 6,204 loans, most of which CIFG said were made by M&T. Goldman subsequently packaged them and sold the GSAA Home Equity Trust 2007-S1 in February 2007; CIFG insured the Class A-1 certificates from the securitization.
CIFG said in the suit that it has reviewed a sample of loans from the portfolio that are in default and that most of them violate Goldman's own guidelines and M&T's representations and warranties on the loans.
"Consistent with the findings from this sample, the loans in the asset pool -- most of which should never have been made in the first place, let alone sold and packaged into a securitization -- have been defaulting at staggering rates, with delinquencies beginning prior to closing of the securitization and increasing rapidly thereafter," the suit said.
CIFG asked the court to order Goldman and M&T to compensate it for claims it may have to pay out in the hundreds of millions of dollars, as well as to buy back the nonperforming loans from the portfolio.
Goldman Sachs declined to comment. An M&T spokesman was not immediately available to comment. CIFG is currently in run-off, managing existing policies but not writing any new business. It is in the process of transferring much of its public finance portfolio to Assured Guaranty (AGO.N).
Read the entire story here