From a Commenter on the GSC story - Diametrically Opposed!

What is not usual is to sponsor an SPV with a third-party whose interests are diametrically opposed to the investors interests, and allow that third-party to select the securities. In this case, they approached ... READ MORE HERE

By GREGORY ZUCKERMAN And SERENA NG

Xinhua/Zuma Press

Goldman Sachs CEO and Chairman Lloyd Blankfein in Washington on Tuesday for Senate subcommittee hearing on Wall Street and the financial crisis.

The Securities and Exchange Commission in recent weeks has questioned executives of a little-known firm that played a key role in the business of arranging mortgage investments, as part of the agency's probe into now-controversial deals struck at the height of the housing bubble.

GSC Group Inc. was one of several firms that helped banks including Goldman Sachs GroupInc. put together deals that allowed investors to bet on the housing market.

The New Jersey investment firm turned down Goldman's request to select assets for the debt deal at the center of the agency's fraud lawsuit against Goldman, according to a person familiar with the matter and an email released by a Senate subcommittee this week. The concern: The deal was too risky for investors, according to the person and the email.

READ FULL TORY HERE

INVESTMENT BANKING

One Firm Refused to Aid a Goldman C.D.O. Plan

April 29, 2010, 7:27 AM

A little-known investment firm has found itself caught up in the Securities and Exchange Commission’s fraud case against Goldman Sachs, The Wall Street Journal reported.

GSC Group, based in New Jersey, was contacted by Goldman back in January 2007 and asked to find mortgage-backed securities for an intricate synthetic collateralized debt deal that the bank was putting together and which now lies at the heart of the S.E.C.’s case against the firm, the newspaper said. GSC refused. Read More »