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Finance expert Tavakoli criticizes Goldman Sachs

From Bloomberg | In an article on Goldman Sachs published April 1 in Bloomberg BusinessWeek magazine, Chicago-based structured finance expert Janet Tavakoli accuses Goldman of taking advantage of a flaw in the system of collateralized debt obligations (CDOs), or what became known as toxic mortgages. She says Goldman squeezed global insurer AIG for cash by marking down mortgages underlying CDOs that were insured by a credit-default swap from AIG, thus creating a no-lose situation for Goldman’s clients at AIG’s expense. “Goldman is trying to pretend it didn’t know any better, while also trying to say they are great risk managers,” says Tavakoli, the president of Chicago advisory firm Tavakoli Structured Finance. “Goldman cannot have it both ways.”

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