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The 'effing case' is that Goldman told the long side investors that ACA independently assembled the reference portfolio when Paulson actually played a significa

• fleitz 16y ago
  ACA did put it together independently. Paulson sent a list of suggestions which ACA was not required and did not include in the way Paulson wanted.
  • jfager 16y ago
    Not true. ACA was being paid by Goldman to put this thing together, who in turn was being paid by Paulson. As long as Paulson wasn't satisfied with the portfolio, Abacus wasn't going anywhere. The fact that they didn't accept his first list without changes does not imply that he didn't directly influence and sign off on the final package.
• bushido 16y ago
  You're correct. Paulson did suggest 123 bonds that he thought should be included in the CDO. And since Paulson was considered smart by ACA he did have an "expert" influence on the final offering. BUT. ACA as an independent portfolio selection agent only selected 55 of those. And only those 55 were used. But since the first 123 were selected by Paulson we should ignore this fact. Since we have already dismissed that ACA independently selected the portfolio, we shopuld also dismiss the fact that ACA's parent company invested $900 million in the CDO, because they believed in the validity of their choices. But then again how is that in any way saying that they approved of the contents of the CDO. Since we have established this,let me try and convince some law firms to start a class action against all colleges, universities, b-schools etc for giving students multiple choice questions, to try and influence their judgement that the answer can be something other than the right one. Not exactly the same case as Paulson, ACA and Goldman, but its soooo close!
  • jfager 16y ago
    So he gets to pick the first 55 and sign off on the last 37, and you don't think that constitutes significant influence?
• yummyfajitas 16y ago
  The 'effing case' is that Goldman told the long side investors that ACA independently assembled the reference portfolio when Paulson actually played a significant role in putting it together. Paulson had a list of securities they wanted to short. ACA selected what was (in their opinion) the best set of long positions from this set. Goldman then sold a synthetic CDO based on the long positions. The exact positions were disclosed, in explicit detail, to every buyer. This is how nearly every synthetic CDO is constructed.
  • jfager 16y ago
    If you read the complaint, it specifically says 55 of Paulson's original list made it into the final portfolio right off the bat, and the final 37 were negotiated between Paulson and ACA and subject to Paulson's final approval. Yes, ACA also had to sign off, but they were hardly 'independent' - Goldman was paying them to build this thing at Paulson's request. So it's clear that ACA sucks. I've never argued that wasn't the case. But ACA's suckage in no way bears on the fact that Goldman plainly lied about the selection process to longside investors (who clearly suck, as well). In summary: everyone involved sucks, except maybe Paulson. Goldman's the only party that criminally sucks, though, at least that we know of right now.
    • yummyfajitas 16y ago
      Obviously it was subject to Paulson's final approval. If ACA did not construct a short position which met Paulson's needs, Paulson would not participate and there would be no CDO (unless another short side was found).
      • jfager 16y ago
        So what are you arguing, exactly? If Paulson had to approve it, and it wouldn't have existed otherwise, how could Goldman possibly represent it as being independently selected by ACA and not be guilty of fraud?
        • yummyfajitas 16y ago