Magazine article American Banker

Union Urges AG Probe into Role Goldman Played

Magazine article American Banker

Union Urges AG Probe into Role Goldman Played

Article excerpt

Byline: William Wade

A labor union is calling for an inquiry into Goldman Sachs Group Inc.'s role in the subprime mortgage crisis.

Workers United, which represents 150,000 workers in the U.S. and Canada, sent letters this week to 10 state attorneys general urging officials to follow the example of Massachusetts Attorney General Martha Coakley. In May, Goldman Sachs agreed to a $60 million settlement to end an investigation by Coakley's office into how the New York financial company packaged securities containing home loans made to Massachusetts residents.

Workers United said its analysis of $23.2 billion Goldman Sachs mortgage bonds offered between August 2005 and February 2007 concluded that residents of the 10 states had 61% of the mortgages in Goldman Sachs' securities.

"It is clear from its response in Massachusetts that Goldman is prepared to respond to pressure from Attorneys General like yourself, which can translate to millions of dollars for hundreds of troubled homeowners," Bruce Raynor, Workers United's president, wrote in a letter to New York Attorney General Andrew Cuomo, which was obtained by Bloomberg News. "The people of New York deserve the same level of compensation for problem loans and access to affordable refinancing."

Goldman Sachs spokesman Michael DuVally said by e-mail that "we strongly take issue with the assertions the union makes. For example, Goldman Sachs was never one of the larger issuers of subprime securities."

During 2006, when the housing bubble started to burst, Goldman Sachs was the 13th-largest issuer and sixth-largest underwriter of securities backed by subprime or second mortgages, according to the newsletter Inside MBS & ABS. It was the seventh-largest issuer and sixth-largest underwriter of bonds backed by alternative-A loans, which are a step higher in credit quality. …

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