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How many of you remember WorldCom? How it kept reporting profits when all of the other long-distance carriers reported dismal performance. I thought something was not right, I just didn’t know what it was. Voila – it turned out that WorldCom's accounting was revealed to be a fraud – the company was counting its network access costs as capital expenses. Once the real numbers came out, the company imploded in what was the largest bankruptcy in American history up to that point. Then came ENRON !

For the past three years, Goldman Sachs has been reporting quarter after quarter of excellent results when all of the other investment banks were hurting. Some analysts suspected that something fishy was going on with Goldman but just couldn’t find a smoking gun, but they knew a giant fraud would be discovered eventually.

In October 2008, one analyst said that Goldman had insured all of its subprime exposure via AIG. This allowed it to book huge profits on its subprime investments long before they were actually paid off because the bonds were insured. Of course, it was all a sham – AIG didn't have nearly enough money to pay off any of the insurance.

However, in the spring of 2009, it was revealed that Goldman had roughly $20 billion in exposure to AIG and received roughly $14 billion of the money the federal government used to bail out AIG. Of course, Goldman refused to comment on the matter at first, but eventually admitted that it had insured roughly $20 billion worth of subprime CDOs(Collateralized-Debt Obligations) with AIG and had major exposure to the firm. But the New York Federal Reserve and Goldman Sachs never revealed this critical fact: Goldman didn't merely buy insurance on a bunch of random subprime CDOs. It actually bought insurance on special CDOs it had put together and sold to its own clients. In other words, Goldman knew more about these CDOs than anyone else. Goldman bought insurance on these CDOs because it knew they'd collapse.

Borrowing the exact words of Porter Stansberry “This is tantamount to building a house, planting a bomb in it, selling it to an unsuspecting buyer, and buying $20 billion worth of life insurance on the homeowner – who you know is going to die! “

These facts all came to light because of research done by the office of Darrell Issa, the ranking Republican on the House Committee on Oversight and Government Reform. These new documents will certainly lead to a full investigation of the Goldman-AIG dealings and the subsequent $180 billion bailout led by the New York Federal Reserve. I vigorously hope that not only will heads roll, but the people responsible will go to jail for a long, long time. Everyone involved in this mess should be punished. And what is so horrible about letting a horribly managed institution fail? We should no longer accept this “TOO BIG TO FAIL” reasoning. We were kept in the dark with this cover up! People are losing jobs, many of them are losing hope. Men who have been productive all their lives are finding themselves unemployed for more than 2 years now. With spirits low, confusion great, some are on the brink of nervous breakdowns (or even suicide) while these BANKERS, EXECUTIVES, MARKET MAKERS and FLIPPERS of CDOs are getting big bonuses to the tune of $100 Million ! I am beyond furious !




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