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Goldman Sachs' Credibility in Question: FCIC Chairman

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Published: Thursday, 1 Jul 2010 | 5:11 PM ET
thompson_cadie_2010_100.jpg By: | Technology Editor, CNBC.com

Goldman Sachs' testimony before the Financial Crisis Inquiry Commission Thursday spurred skepticism and frustration among commission members when the investment bank claimed it doesn't break out revenue and profit data from derivatives, Phil Angelides, chairman of the commission, told CNBC Thursday after the hearing.

FCIC Chair Angelides on the Record
Phil Angelides, chairman of the Financial Crisis Inquiry Commission, talks to CNBC.

"The commission had some real questions of credibility about whether an institution as sophisticated as Goldman can't tell whether it's making money or losing money on the derivatives business," said Angelides. "They have 1.2 million derivatives contracts and it just seems logical that they should be able to produce the management information to show us the scale of its business."

The FCIC is tasked with looking at the cause of the financial crisis and as part of that task it is important for the commission to measure the effect derivatives played in the financial meltdown, Angelides said.

Angelides called into question Goldman's role in AIG'snear collapseand whether or not Goldman, which was net short on mortages in 2007, was marking prices down, making collateral calls, that in turn put heavy pressure on AIG.

"As I said to the Goldman people, it's clear you helped build the bomb of all these synthetic instruments, it's pretty clear they built a bomb shelter when they went short," said Angelides. "Now, the question is did they help light the fuse by marking down prices and making these aggressive collaterall calls on AIG."

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Goldman Sachs' testimony before the Financial Crisis Inquiry Commission Thursday spurred skepticism and frustration among commission members when the investment bank claimed it does not break out revenue and profits from derivatives exposure, Phil Angelides, chairman of the commission, told CNBC Thursday after the hearing.
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