Posted 2 years ago on Nov. 10, 2011, 5:27 p.m. EST by MonetizingDiscontent
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Goldman’s oops may be $15.8 Billion
By MARK DECAMBRE
Lloyd Blankfein’s gold-plated bank appears to be dialing up estimates on everything except for profits.
Yesterday, Goldman Sachs announced that costs of its mortgage-related securities minted during the credit crisis could saddle it with a whopping $15.8 billion tab.
That’s more than a 3,150 percent increase from the $485 million estimate Goldman offered up just about three months ago.
The gigantic mortgage liability increase is a result of a fresh lawsuit against the firm run by CEO Blankfein by the Federal Housing Finance Agency, which alleges that Goldman should have known that some $11.1 billion in dicey mortgage securities it sold the agency were ticking time bombs.
The raft of disclosures were a part of quarterly filings to regulators.
In the public filing, Goldman also estimated that its legal expenses rose to $2.6 billion from $2 billion last quarter.
The firm’s beefed up legal bills come as its boss Blankfein is still facing a probe by the Department of Justice related to the investment bank’s role in the 2008 credit crisis and allegations that the lied under oath to a Congressional finance panel.
Blankfein hired star criminal lawyer Reid Weingarten to represent him personally in the matter. Goldman has said the hiring is routine in such investigations.
The investment bank’s regulatory disclosures come on the heels of one of the firm’s rockiest quarterly results in which the bank logged a third-quarter loss of $393 million, or 84 cents a share and 21 days of trading losses -- only its second-ever quarterly loss since the firm went public in 1999.
Meanwhile, Goldman unloaded a portion of its stake in Sino-banking giant Industrial & Commercial Bank of China for approximately $1.54 billion.
Goldman had accumulated a roughly 11.7 percent stake in one of China’s largest banks ICBC since 2006.
MF Global and ‘Peek-a-Boo’ Accounting
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The $593 million shortfall in client money at MF Global Holdings Ltd., the broker that filed for bankruptcy on Oct. 31, appears to result from a “massive hide- and-seek ploy,” Bart Chilton, a commissioner at the U.S. Commodity Futures Trading Commission, said today.