Did Bank Of America And Citigroup Commit Accounting Fraud?

On CNBC:

• Bank of America and Citigroup incorrectly accounted for billions of dollars in debt over the past three years, according to a report from the Wall Street Journal.
  
  The report highlights a form of corporate borrowing increasingly under scrutiny since the financial crisis began. The loans, known as "repos," or short-term repurchase agreements, allow banks to increase the amount of risk they can take in securities trading.
  
  Both BofA [BAC 15.74 -0.44 (-2.72%) ] and Citigroup [C 3.96 -0.06 (-1.49%) ] disclosed in filings with the Securities and Exchange Commission that they have over the last three years accidentally classified some repos as sales when they should have been classified as borrowings, the newspaper reported. The amounts involved were small for the banks, though they totaled billions.... http://www.cnbc.com/id/37366067

The WSJ article..

WSJ: Bank Of America, Citigroup Incorrectly Hid Billions In Repo Debt

• Bank of America Corp. (BAC) and Citigroup Inc. (C) incorrectly hid from investors billions of dollars of their debt, similar to what Lehman Brothers Holdings Inc. did to obscure its level of risk, company documents show.
  
  In recent filings with regulators, the two big banks disclosed that over the past three years, they at times erroneously classified some short-term repurchase agreements, or "repos," as sales when they should have been classified as borrowings. Though the classifications involved billions of dollars, they represented relatively small amounts for the banks.
  
  (This story and related background material will be available on The Wall Street Journal Web site, WSJ.com.)
  
  A bankruptcy-court examiner said Lehman had been doing the same thing to make its balance sheet look better before it filed for bankruptcy in September 2008, using a strategy dubbed "Repo 105" that helped the Wall Street firm move $50 billion in assets off its balance sheet.
  
  Bank of America and Citigroup say their misclassifications were due to errors--not an attempt to make themselves look less risky, which examiner Anton Valukas said was Lehman's motivation. The disclosures, made after federal securities regulators began asking financial firms about their repo accounting, were included in quarterly filings earlier this month but not highlighted.
  
  The disclosures come amid a series of revelations about how banks obscure their risk-taking before reporting their finances to the public, a practice known in the financial world as "window dressing."
  
  Bank of America and Citigroup were among the banks cited in a page-one Wall Street Journal article on Wednesday detailing how financial firms temporarily shed repo debt at the ends of quarters, when they report their finances to investors. Since the financial crisis began, both banks often have reduced their quarter-end repo debt from their average borrowings for the same quarter. That activity didn't involve misclassifying repo loans as sales.
  
  Repos are short-term loans that allow banks to take bigger risks on securities trades; classifying the transactions as sales instead of borrowings allows a firm to take assets off its balance sheet and thus reduces its reported leverage, or assets as a multiple of equity capital.
  
  Federal securities rules bar financial firms from intentionally masking debt to deceive investors. There is no indication that Bank of America or Citigroup misclassified their repos intentionally or that the Securities and Exchange Commission will take any action against them. An SEC spokesman declined to comment.
  
  The amounts Bank of America and Citigroup cite are relatively small. The misclassifications had tiny impacts on the banks' reported leverage, and none at all on their earnings or shareholder equity. The banks didn't restate any financial statements.
  
  Bank of America said the misclassified transactions in certain quarters over the past three years-ranging from $573 million to as much as $10.7 billion-"represented substantially less than 1% of our total assets" and had no material impact on its balance sheet, earnings or borrowing ratios.
  
  Citigroup said the misclassified transactions-of $5.7 billion as of the end of 2009, and as much as $9.2 billion over the past three years-involved "a very limited number of our business units" that "used this type of transaction in very small amounts." It also said its errors were immaterial to its financial statements. "At no point in time was the impact of these sales transactions large enough to have a noticeable impact on our published leverage ratios."
  
  By comparison, both banks have more than $2 trillion in assets.
  
  The SEC had asked big banks in March for more information about their repo accounting in the wake of the Lehman bankruptcy report. That inquiry hasn't found any widespread inappropriate practices, SEC Chief Accountant James Kroeker told a congressional subcommittee last week.
  
  But Kroeker said the SEC has asked several companies to provide more disclosure about their repo accounting in their securities filings. Bank of America and Citigroup indicated they had found their errors on their own initiative.
  
  More broadly, the SEC is now considering stricter disclosure and a clearer rationale from firms about quarter-end borrowing activities. The agency may extend these rules to all companies, not just banks. The potential new rules, disclosed by SEC Chairman Mary Schapiro at a congressional hearing last month, came two weeks after the Journal's initial article about banks' debt-masking activity.
  
  Separately, Bank of New York Mellon Corp. (BK) said in a securities filing that it had found some small errors in its repo accounting over the past three years. The bank said it didn't use Repo 105 transactions.
  
  The errors have been corrected, and none of them were material to the bank's financial statements, the bank said in the filing. A Bank of New York Mellon spokesman declined further comment.

So CNBC version is incorrectly account... WSJ version was incorrectly hid...

LOL!

Sigh!

So what was at stake?

The amount of debts.

Surely... the amount of debts in a balance sheet is so very crucial for the investor in the street, yes? How can the banks incorrectly account/hid these figures?

Yes it might had no financial impact to the banks earnings but the balance sheet did look better than what it really was had these debts been accounted correctly!

Would it be piss wrong to accuse that this is pure financial shenanigans?

Or would it be wrong to call it fraud?

And these banks are trying to dismiss it as small amount.

My... it's only BILLION of dollars worth of incorrectness!

My.... good or what!

Huge Warning On Bank Stocks From Meredith Whitney

When Meredith Whitney talks, you better listen. I would.

On CNBC: Investors Should Avoid Banks 'At All Costs': Meredith Whitney

• Investors should "avoid financials at all costs, particularly in the banking sector" because the Senate's financial reform bill will end up restricting credit and hurt bank earnings, well-known banking analyst Meredith Whitney told CNBC.
  
  "Politicians have proven far worse than our worst expectations," she said in an interview. "It could be very bad for banks."
  
  Whitney cited two new credit card rules in the Senate bill as particularly onerous. One would force banks to comply with individual state caps on credit card interest rates. The other would regulate how much credit card issuers could charge merchants for using their cards.
  
  The state caps on interest rates, she said, could make rates in one state lower than in another, causing banks not to lend in certain states.
  
  "It's going to make accessing capital so difficult for pockets of the country," she said, particularly for small businesses that often depend on credit cards for funding.
  
  In addition, the proposed rule on merchant charges—instead of benefiting consumers—will price community banks out of the market, Whitney said, restricting credit even more.
  
  "Some of these regulatory proposals are going to make it so difficult for everyone involved that you'll see, I think, at least another $1.3 trillion (of credit) sucked out of the system," she said.
  
  Instead of "jamming down last-minute regulations just to appear to be tough on banks," Whitney said, Congress should make it easier for small businesses to obtain credit.
  
  Still, Whitney said European banks are in even worse shape than their US counterparts, and she would not invest in them "in a million years."
  
  The drop in credit card delinquencies reported Monday was actually the result of new credit card rules that took effect earlier this year, she said. The restrictions prompted banks to exclude less credit-worth borrowers and move toward higher-end consumers, which would result in fewer delinquencies.
  
  Looking ahead to the second half of this year, Whitney expects more consumers to lose their jobs and have even more limited access to credit. The housing market will likely see a double dip, she said, while the stock market will be "bleak."
  
  "It's going to be rocky sledding," she said.

How?

You reckon there's any justification in her reasoning?

But Meredith did not touch on the trading proprieties of the US banks.

For example, here is FT.com article on Goldman Sachs and Jp Morgan last week: Goldman and JPMorgan roar ahead

• The trading operations of Goldman Sachs and JPMorgan Chase made money every single business day in the first quarter, a feat that was a first for the companies and underlines the boom in Wall Street’s investment banking revenues.
  
  Goldman’s trading desk recorded a profit of at least $25m (£16.8m) on each of the quarter’s 63 working days, making more than $100m a day on 35 occasions, according to a regulatory filing issued on Monday.
  
  ...
  
  However, JPMorgan also achieved a loss-free quarter in its trading unit – making an average of $118m a day, nearly $5m an hour – as it built on the gains made during the financial crisis when rivals faltered or failed.

Yup, the trading profits recorded by the bankers simply dominates their normal conventional banking activities.

I wonder.. given the size of these trading profits... do the bankers really care about banking anymore?

Sigh!

That's simply sad isn't it?

Told To SHUT UP!

On Uk Telegraph: Tim Geithner's NY Fed told AIG to keep quiet about $105bn paid to banks

• The New York Fed, under Mr Geithner's leadership until he was appointed US Treasury Secretary in January 2009, instructed the troubled insurer to withhold details of the payments from the American public, which bailed out AIG by as much as $182bn at its financial nadir.
  
  According to a series of emails obtained and made public by Congressman Darrell Issa, AIG had planned to inform investors in a regulatory filing published on December 24, 2008, that it had paid counter-party banks owed money at a rate of 100 cents on the dollar. The banks were owed the money for credit-default swaps they had entered into, mainly on behalf of clients.
  
  However, according to the emails, an official from the NY Fed crossed out the reference ahead of publication, and there was no mention of the payments, which came to light five months later, in the filing.
  
  "It appears that the New York Fed deliberately pressured AIG to restrict and delay the disclosure of important information," said Congressman Issa.
  
  Publication of the potentially embarrassing emails comes two months after it emerged that it was the New York Fed that was behind a decision to pay the banks in full, rather than at a discounted rate.
  
  "Our position has always been that if AIG's securities lawyers determine that AIG is legally obligated to make a particular filing or disclosure, then that is what AIG must do," said a spokesman for the New York Fed.
  

Don't These Goldman Sachs Bankers Feel Ashamed With Their Pay And Bonuses??

And this is what so WRONG with Wall Street and this is why Bennie Should Really Go! : Goldman Sachs bankers on course for $19bn pay and bonuses

• Remuneration after bumper year looks set to spark controversy
  
  Richard Wachman and Phillip Inman The Observer, Sunday 6 December 2009
  
  Goldman Sachs will ignite a storm of controversy in the new year when it reveals that its bankers are on course to collect pay and bonuses worth $19bn (£11.4bn), despite 2009 being the worst year for the US economy in 30 years.
  
  The news comes as banks in Britain find themselves in the firing line after it emerged that 5,000 bankers stand to collect more than £1m each, sparking criticism from ministers who accused financiers of being out of touch as millions are thrown out of work amid recession.
  
  City sources say that the pay and bonus pot at Goldman is based on projected figures from Thomson Financial, published on Friday, which show that the investment bank is expected to generate net income of around $45bn.
  
  Analysts predict that 43% of that figure will be set aside for compensation to be distributed to the bank's 31,700 employees, 6,000 of whom are in London. Remuneration as a proportion of net income is expected to be lower than the average of 46.7% in the 10 years to 2008, partly as a sop to US public opinion.
  
  Brad Hintz, investment banking analyst at Sanford Bernstein, says: "Everyone inside the firm is aware there is more than enough money available to make everyone happy."
  
  Goldman has enjoyed a bumper year thanks to booming debt markets, a recovery in the oil price and a rise in the value of equities since January, with some indices up by 20%. The bank trades off its own account as well as on behalf of clients.
  
  Goldman's three leading executives, chairman Lloyd Blankfein, president Gary Cohn and chief financial officer David Viniar, will receive multi-million dollar payouts after forgoing their bonuses last year when the bank made a loss in the fourth quarter. Average compensation for the rest of the workforce will come in at about $743,000. The bonus culture is under attack on both sides of the Atlantic as it is blamed for having encouraged bankers to make reckless decisions during the credit boom that contributed to the near collapse of the financial system in 2008.
  
  Bonus payments are an especially sensitive issue as banks such as Goldman took government money during the height of the crisis. The move was designed to prevent another banking collapse following the demise of Lehman Brothers and Bear Stearns.
  
  In June, Goldman repaid $10bn of Treasury funding in order to free itself from onerous pay caps being imposed by the Obama administration.
  
  But, in a sign that Goldman is sensitive to a public backlash, the bank is prepared to pay staff largely in shares rather than cash.
  
  In Britain, the Financial Services Authority is telling banks to adhere to the principles laid out at the recent G20 meeting that call for bonus payments to be deferred and subject to claw back in the event of failure two or three years down the line. The G20 also called for stock awards rather than cash.
  
  Other investment banks, such as Barclays Capital, Credit Suisse and JP Morgan, are expected to pay huge bonuses to staff after a year in which their fortunes revived as the banking sector stabilised.
  
  In London, the row rumbles on over planned bonuses worth £1.5bn for staff at the investment banking arm of Royal Bank of Scotland where the state owns a 70% stake after a taxpayer bailout. Ministers have demanded a veto.

Yeah, What's Wrong With Our Financial Worlds?

This passage from the above posting just says it all!

• What’s wrong with financial-industry compensation? In a nutshell, bank executives are lavishly rewarded if they deliver big short-term profits — but aren’t correspondingly punished if they later suffer even bigger losses. This encourages excessive risk-taking: some of the men most responsible for the current crisis walked away immensely rich from the bonuses they earned in the good years, even though the high-risk strategies that led to those bonuses eventually decimated their companies, taking down a large part of the financial system in the process.

Exactly!

With such a system it merely encourages EXCESSIVE RISK-TAKING!

What a freaking wonderful world for these bankers, no?

They take their excessive risks and when they fail, they get bail-out! And when they do make profit, look at how much money they wants to be compensated with????

Dear Lord, I do hope miracles do happen and may this year miracle, see these insanely greedy, gutless and shameless bankers get their due and just punishment!

Why The Banking Sector Is Still Shakey

I was just reading Sprott Asset Management report on the banking sector.

You can read the full report here: Don't Bank On The Banks

The table highlighted on page 3.

Page 4.

• In Chart A we provide leverage levels for a few select banks that deserve special mention in our leverage discussion. These three banks were all bailed out by their respective governments. We’d like to draw your attention to their leverage ratios, prior and post-bailout, to emphasize the importance of leverage over time.
  
  We’ll start with Citigroup, which was de facto nationalized by the US government when it received $25 billion from the TARP program, a massive US government guarantee on $306 billion in residential and commercial loans and a $27 billion cash injection for preferred shares. You can see the impact these bailouts had on Citigroup’s leverage ratio over the years, moving it from 37:1 in 2007, increasing to 64:1 at the end of 2008 and back down to 17:1 after the government cash injections. The 64 to 1 ratio required a government bailout. One wonders if 17 to 1 is an appropriate level for Citigroup, given their exposure to high risk assets.
  
  The Royal Bank of Scotland makes Citigroup’s leverage look tame in comparison. Using our definition, we calculated an eye popping leverage ratio of 574:1 in 2007, implying that a mere 0.17% decrease in assets would have wiped out their tangible common equity. Is it any wonder then that the hiccup in the housing market blew them apart? RBS now holds the distinction as the world record holder for the largest bank bailout. The UK Government has earned a 70.3% shareholding in the bank after providing them with their second bailout in November 2009.10 In total, a whopping £53.5 billion has been injected into RBS by the British Government, which is now exposed to losses on £250 billion of RBS balance sheet assets. In return for the government support, RBS has agreed not to pay cash bonuses to any staff earning above £39,000 in 2009, and to defer executive bonuses until 2012. Although they’ve come down since 2007, RBS still maintains a very high leverage ratio. Hopefully two bailouts by the UK government will be enough.
  
  Our final example is Dexia. It was bailed out by three separate governments and its shareholders, receiving €6.4 billion in bailout money from France, Luxembourg and Belgium in September 2008. Dexia is the largest lender to local governments in France and Belgium. According to their latest financial filings, Dexia is operating at a leverage ratio of 116:1, which strikes us as very extreme in this environment. Again – at those leverage levels, the smallest asset decrease would wipe out all tangible common equity. That’s extremely risky for an institution as large as Dexia, and highlights the problems that still plague the global financial system.
  
  The examples above show that our leverage measurement is a good variable to review before making a common equity investment in a bank. The higher the leverage ratio, the greater the risk of losing your common equity. While we haven’t delved into the asset “quality” of any of these banks, we have been watching US bank failures for a market-based indication of the quality of their assets in a liquidation scenario. High profile examples include Colonial Bank, the largest US bank failure thus far in 2009, which had total assets of $25 billion and cost the FDIC $2.8 billion in losses - representing an 11% write-down on their assets. Also notable was Chicago’s Corus Bank, which cost the FDIC $1.7 billion on total assets of $7 billion - representing a 24% write-down. For Colonial, 10:1 leverage was too high, and in the case of Corus, a mere 4:1. Citing the most recent bank failures in the US, it would appear that most financial assets are still being written down by at least 10%. Although each bank is different and has its own specific asset allocation, this raises major cautionary flags for us, given that the banks listed above still utilize leverage ratios well above 20:1. For such a seemingly complicated industry, it surprises us that such a simple red flag continues to stump the regulators who oversee it.
  
  Given the discussion above, is it any wonder why we continue to see banks receive more government cash injections and asset guarantees? And is it any surprise that banks aren’t lending the cash they were given by the central banks? Of course it isn’t. The leverage in the banking system is still too high. Judging by recent comments by finance ministers and central bankers, it is clear to us that they have no plans to address leverage in their regulatory proposals, and until they do, we would advise that you invest in bank stocks with extreme caution. Don’t say you weren’t warned.

Makes you wonder about Citigroup. Their leverage is still 17:1???? Not a worry? Colonial Bank which went down, according to this report, had a leverage of only 10:1. And Corus Bank of Chicago had a leverage of only 4:1!

Hmmm.....

Then I was thinking of Dubai World.

Well two of the shakiest bank mentioned in Sprott Management report, was included in the list of Banks With The Biggest Exposure to The UAE!!!

On the UK Telegraph: Banks braced for record debt defaults in the New Year

• January is traditionally the worst time of year for debt defaults, according to the credit checking company Experian. The recent surge in unemployment and personal insolvencies will make the first quarter "the busiest period ever", the company said.
  
  "Christmas is a catalyst for delinquency and bad debt, with credit card and overdraft debt traditionally peaking in the New Year," Simon Waller, Experian's head of collections for UK and Ireland, said.
  
  "Economic indicators and feedback from our collections clients suggests that the first quarter of 2010 could be the busiest period ever seen."
  
  Experian is anticipating the worst due to the 771,000 job losses in the first nine months of the year, a 94pc increase on 2008, and the record quarterly personal insolvency rate of 41,390 for the three months to September.
  
  Banks have also been cranking up their marketing to households in the run up to Christmas. The Call Prevention Registry has seen a 50pc increase in "nuisance calls" from debt management organisations in the past month trying to persuade customers to take out new loans.
  
  Mr Waller said: "With unemployment at its highest since 1996 and record numbers of redundancies and insolvencies, it is vital for collections departments to do everything to ensure that their people can cope with the influx of new cases."

And over at Jesse's Café: The Dangerous US Financial Sector Still Smoldering

Yeah Lloyd Blankfein Should Just Shut Up!

On CNN Money: Shut up, Lloyd Blankfein!

• Shut up, Lloyd Blankfein!
  
  The Goldman Sachs CEO is trying to portray the Wall Street titan as a paragon of virtue. But Blankfein should stop pretending that the bank is a charity.
  
  By Paul R. La Monica, CNNMoney.com editor at large
  Last Updated: November 18, 2009: 12:22 PM ET
  
  NEW YORK (CNNMoney.com) -- The public relations gurus who are advising Goldman Sachs Chief Executive Officer Lloyd Blankfein might want to give him some new advice. Shut up!
  
  Blankfein made a startling confession Tuesday. He apologized for Goldman's role in the financial crisis, saying that the bank "participated in things that were clearly wrong and have reason to regret."
  
  But it's tough to take Blankfein at his word. This mea culpa came a little more than a week after he made an embarrassing comment in an interview with the Financial Times, saying that he was just "doing God's work." Interesting. I don't believe there are any references to credit default swaps in the Bible, Torah, Koran or any other religious text.
  
  While Blankfein might have made the "God's work" comment in jest, it still goes to show that he needs to tread carefully if he really wants to prove to taxpayers that Goldman is not really the blood-sucking parasite that many are now making it out to be.
  
  Goldman is facing a populist backlash because it was one of the original nine firms to receive bailout funds last fall. But it is now all of a sudden generating gigantic profits again and putting away large wads of cash for employees in its bonus pool.
  
  Goldman has earned $8.4 billion in the first nine months of 2009. The company has already set aside $16.7 billion for compensation expenses, putting it on track to have a bonus pool of about $21 billion at year's end.
  
  So it's no wonder that Blankfein has turned the spin cycle on over the past few months to try and send the message that Goldman Sachs (GS, Fortune 500) is the Wall Street equivalent of Google, i.e. it won't do evil.
  
  On Tuesday, Goldman announced that it, along with investing legend Warren Buffett, is launching a $500 million program geared toward helping small businesses.
  
  That's certainly admirable even though it's fair to cynically point out that Buffett's Berkshire Hathaway (BRKA, Fortune 500) investment firm is Goldman's largest shareholder. So I don't think I am going out on a limb to guess that the idea for this largesse probably had its roots in Omaha as opposed to the corner offices on Broad Street.
  
  And if Blankfein is really sorry about the mistakes Goldman made, here's a thought: Instead of contributing a meager $500 million to help get small businesses back on track, maybe he could kick in $14 billion instead.
  
  That's the amount of money Goldman received from AIG (AIG, Fortune 500) (courtesy of the U.S. taxpayer-funded bailout of the insurer) because of the so-called counterparty risk.
  The small business program is Blankfein's latest attempt to try and prove that what's good for Goldman is good for America.
  
  Last month, Blankfein told Fortune managing editor Andy Serwer that the company contributes to the nation's growth. "Once the economy starts to turn, we get very involved," he said.
  
  Back in July, Goldman went out of its way to pat itself on the back for paying $1.1 billion to the government to redeem warrants that Uncle Sam got as part of last fall's $10 billion bailout of the firm.
  
  Goldman deemed the payment "full and fair," and in a statement Blankfein gushed that Goldman was "pleased that this additional money can be used by the government to revitalize the economy, a priority in which we all have a common stake."
  
  None of this is technically wrong. It's, of course, better for Goldman to be back in the black as opposed to bleeding red ink.
  
  But has Blankfein blanked out and mistaken himself for former Goldman chief (and soon to be former governor of the Garden State) Jon Corzine? It almost sounds as if Lloyd is running for public office. What's next? Kissing babies and train rides all across America?
  
  Blankfein shouldn't feel the need to constantly remind us of how Goldman is an important cog in the GDP growth machine and engage in excessive self-flagellation just because business is booming again.
  
  It's actually an encouraging sign that banks like Goldman, JPMorgan Chase (JPM, Fortune 500), Wells Fargo (WFC, Fortune 500) and U.S. Bancorp (USB, Fortune 500) -- to name a few -- are this strong only a few months after many thought the financial system was doomed.
  
  The notion that Goldman's good fortune is a problem is silly. Even though many average Americans are still struggling financially, it's misguided to suggest that everybody should be suffering and that the nation would have been better off if Wall Street went under. We shouldn't be demonizing success.
  
  And let's not forget that Goldman has paid back taxpayers not just for the warrants but the full $10 billion in TARP money. There's a big difference between Goldman and Bank of America (BAC, Fortune 500) and Citigroup (C, Fortune 500), which still don't seem to be healthy enough to return bailout funds.
  
  But Goldman Sachs is a bank. It's supposed to make money. It's supposed to take risks. Lloyd isn't exactly running the March of Dimes.
  
  Blankfein is fighting a battle he can't win. He can't come out and bluntly state that his company's return to prosperity should be applauded because it proves that his firm's employees are more competent than Goldman's rivals. That's why he should just keep quiet.
  
  The problem is that Blankfein is trying to dupe people into thinking that he's had his Ebenezer Scrooge moment and that Goldman is now more interested in serving the public than making a buck.
  
  Apologizing for the credit bubble and claiming that Goldman has the best interests of the people at heart just makes Blankfein look foolish, not sympathetic.
  
  Come on. We all know how Wall Street works. The fact that Goldman hotshots are set to make big bonuses this year isn't nearly as insulting as the fact that Blankfein wants us to believe that investment bankers and traders are really nothing more than highly compensated social workers.

Well said.

In an another article on Reuters, highlighted by TT, Goldman was exposed to AIG losses: government report

• NEW YORK (Reuters) - Goldman Sachs Group Inc could have suffered dramatic losses if the federal government had not intervened to prop up American International Group Inc, according to a government report.
  
  The report by the special inspector general for the government bailout program raises doubts about Goldman's previous claims that it was hedged against potential AIG losses.
  
  Last fall, as the financial services industry stood on the brink of collapse, the government stepped in with an unprecedented effort to rescue the system. AIG was among the companies that received billions of dollars from the U.S. Treasury's Troubled Asset Relief Program.
  
  If AIG had collapsed, it would have made it difficult for Goldman to liquidate its trading positions with AIG, even at discounts, the report said. It also would have put pressure on other counterparties that "might have made it difficult for Goldman Sachs to collect on the credit protection it had purchased against an AIG default."
  
  Finally, the report said, an AIG default would have forced Goldman Sachs to bear the risk of declines in the value of billions of dollars in collateralized debt obligations.
  
  A Goldman spokesman called the risks discussed in the report a "moot point."
  
  "Goldman Sachs has consistently said its exposure with AIG was collateralized and hedged and therefore we had no direct credit exposure," Goldman Spokesman Michael DuVally said. "Given the hedges, collateral, and government backing as a result of the bailout, the additional risks of declining market values in the event of an AIG default are a moot point."
  AIG has received pledges of up to $180 billion in taxpayer aid since last fall to help save it from collapse. It was revealed in March that Goldman received $12.9 billion in payments and collateral from AIG.
  
  David Viniar, Goldman's chief financial officer, in March told reporters that the Wall Street bank did nothing wrong when it accepted payments to close out trades with AIG.
  
  The full report can be viewed at: here

Me?

I think them guys on Wall Street should get a real job. Get a life!