Insurer trades 'accurate'
By Sakthi Prasad |
August 3, 2010, Tuesday
|
Print Edition
Print Edition
GOLDMAN Sachs believes its trades with the bailed out insurer AIG during the financial crisis were accurate and its collateral calls made to AIG were reflective of the conditions in a deteriorated market.
In a response submitted to the Financial Crisis Inquiry Commission (FCIC) on July 28, Goldman said it priced the collateral posted by AIG based on the best available market information at the time, including observed trades, actionable bids or offers from other parties.
"We made those collateral calls based on prices that reflected the deteriorating conditions in the market for the underlying collateral in Residential Mortgage Backed Securities and CDOs," Goldman said in its response.
On July 23, Goldman Sachs is said to have turned over a list of the counterparties to the FCIC following a recent hearing exploring the links between Goldman and AIG.
Goldman has long been criticized for benefiting from the United States taxpayer bailout of AIG.
Taxpayers pledged up to US$182 billion to address problems at AIG's financial products division.
"The foundation of our approach to risk management is based upon disciplined mark-to-market accounting," Goldman said.
Goldman said it had used information obtained through its franchise for pricing collateralized debt obligations (CDOs) posted by AIG.
"From July of 2007 through November of 2008 there was observable market data which provided the basis for our collateral requests to AIG," Goldman said.
Goldman also said AIG did not have an internal pricing system to value the securities on which it sold credit protection until December 2007.
In a response submitted to the Financial Crisis Inquiry Commission (FCIC) on July 28, Goldman said it priced the collateral posted by AIG based on the best available market information at the time, including observed trades, actionable bids or offers from other parties.
"We made those collateral calls based on prices that reflected the deteriorating conditions in the market for the underlying collateral in Residential Mortgage Backed Securities and CDOs," Goldman said in its response.
On July 23, Goldman Sachs is said to have turned over a list of the counterparties to the FCIC following a recent hearing exploring the links between Goldman and AIG.
Goldman has long been criticized for benefiting from the United States taxpayer bailout of AIG.
Taxpayers pledged up to US$182 billion to address problems at AIG's financial products division.
"The foundation of our approach to risk management is based upon disciplined mark-to-market accounting," Goldman said.
Goldman said it had used information obtained through its franchise for pricing collateralized debt obligations (CDOs) posted by AIG.
"From July of 2007 through November of 2008 there was observable market data which provided the basis for our collateral requests to AIG," Goldman said.
Goldman also said AIG did not have an internal pricing system to value the securities on which it sold credit protection until December 2007.
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