Goldman Threatened With Audit

Goldman Sachs GS is facing a threat by the Financial Crisis Inquiry Commission to bring in outside accountants to comb through the bank's systems for data on its derivatives business, the panel's chairman has said. The commission will not back down from demands for information Goldman's executives have maintained they do not track, Phil Angelides told the Financial Times. "We have a deep level of questioning about whether we're getting the straight scoop here and whether Goldman is working with us on information that they surely have," said Angelides, chairman of the U.S. Congress-appointed commission. His comments mark the latest episode in the dispute between Goldman and the commission, which has scolded the bank for its "abysmal" response to the inquiry. The frustration of FCIC members was evident several weeks ago when two of Goldman executives, Gary Cohn, president, and David Viniar, chief financial officer, told the panel the bank's accounting systems did not break out trading revenue generated strictly from derivatives. They maintained that such information would give little insight into the bank's trading risks as many trades involving a derivative contract also include an offsetting cash security. For instance, Goldman might buy a credit default swap to hedge against the possible default of a company where the bank also has a position in its debt. Tracking the revenue of one slice of a trade would ignore whatever gains or losses were booked on the other side, the bank said. "We continue to work with the FCIC and their staff," Viniar told the FT last week. On Friday, people familiar with the matter said Goldman had fulfilled another request by the FCIC -- giving it a list of counterparties from which the bank bought credit insurance on AIG AIG, the U.S. insurer. To read the rest, head over to TheStreet.com