Photo: Kim Scarborough
Credit is owed to CNBC’s Steve Liesman for breaking some interesting stories in the Goldman Sachs (GS) fraud charges.Yesterday he revealed that the SEC has testimony from Paulson lieutenant Paolo Pellegrini suggesting that ACA was told directly that Paulson’s intention was to go short the synthetic CDO that was being constructed.
Today he reveals more about ACA’s role in selecting the mortgages that went into the CDO, and suggests that ACA’s desired mortgages actually made the CDO worse than what Paulson himself wanted. This seems to be based more on outside analysis than on some inside knowledge, but it’s still interesting.
Specifically, ACA wanted more California-based, adjustible-rate mortgages than what Paulson proposed.
Themore we learn about this story, the more it looks as though ACA and IKB were really just hungry for risky CDOs, and it’s doubtful that there was any revelation about Paulson that would have stopped them from buying.
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