Report: AIG Ponders Action against Goldman Sachs

AP Photo/Mark Lennihan
AP Photo/Mark Lennihan

The potential implications of the SEC fraud case against Goldman Sachs has captured the attention of Wall Street, but AIG may be watching closer than most.

The former insurance giant, which is now controlled by the U.S. government, is examining whether it has grounds for its own complaint against the powerhouse bank after losing billions of dollars insuring similar mortgage-backed securities to the one at the heart of the SEC charges, reports the Financial Times.

AIG insured $6 billion worth of Goldman's collateralized debt obligations and is believed to have incurred $2 billion in losses on the deals. According to the report, AIG is looking into whether Goldman failed to disclose key information about any of those deals, as the SEC charges it did in the current case involving hedge fund Paulson & Co.

It's important to note, Goldman didn't insure the specific deal in question - Abacus 2007-AC1 - though it insured other securities in the Abacus family of investments. Even then, AIG would have to demonstrate more than a superficial similarity to the deal in question if it wants to pursue its own complaint, according to the report.

The SEC claims Goldman misled investors on a security that was designed to fail. Goldman denies the charge.

The case has spurred intense scrutiny of the banks dealings, even in Europe. Britain's Financial Services Authority said Tuesday it was launching its own investigation into Goldman's International division and will coordinate with the SEC in its probe.

And the German Finance Ministry, along with the government-owned KfW development bank and IKB Deutsche Industriebank AG, have said they're watching the proceedings closely, as the banks sustained losses in the deal.

In addition, two Democratic congressmen, Elijah Cummings of Maryland and Peter DeFazio of Oregon, plan to ask the SEC to examine the deals between AIG and Goldman.

More on Goldman Sachs and Financial Reform:

Spitzer: SEC will Likely win Case against Goldman Sachs

Goldman Sachs Hires Ex-White House Counsel

Goldman Sachs Faces U.K. Investigation

GOP Decries "Partisan" Financial Reform Bill

Goldman Suit No "Slam Dunk" For SEC

Analysts Bullish on Goldman, Despite Charges

SEC vs. Goldman: A Matter of "Material"