Wall Street’s most-profitable securities firm Goldman Sachs (GS), facing federal charges of defrauding investors in selling them risky subprime mortgages packaged as securities without telling buyers that the CDOs were partly structured with input from billionaire and hedge fund manager John Paulson who was shorting them, also could be investigated in Germany.
According to AP, Angela Merkel’s gov’t is considering taking legal action against Goldman Sachs relating to the CDOs itself to a German bank.
“Buyers included German bank IKB Deutsche Industriebank AG — an early victim of the financial crisis that was rescued by the state-owned KfW development bank among others.
The Welt am Sonntag newspaper quoted Chancellor Angela Merkel’s spokesman, UIrich Wilhelm, as saying that German regulator BaFin will ask the U.S. Securities and Exchange Commission for information.
“After a careful evaluation of the documents, we will examine legal steps,” he said, according to the report.
Is worth pointing out that Merkel already has hostility towards Goldman Sachs due to the firm’s apparent role in Greek efforts to conceal the size of the country’s deficit in order to gain membership status into the EU as Greece struggled to comply with European Union limits.
In a speech in northern Germany in mid February, Merkel said that it would be “a scandal if it turned out that the same banks that brought us to the brink of the abyss helped massage Greece’s budget and fake its statistics.”