Bloomberg offers an interesting article on a document that has much to say about the controversy over all those CDSs that Goldman Sachs (GS) bought from AIG (AIG news). The document, dug up and released by the House Committee on Oversight and Government Reform in January, seems to buttress the view that Goldman Sachs (Goldman Sachs news) underwrote a lot of destined-to-blow up CDOs, knowing that it would buy CDSs (CDS news) on these securities from AIG.

The document lists the CDOs on which AIG underwrote insurance. "The public can now see for the first time how poorly the securities performed, with losses exceeding 75 percent of their notional value in some cases. Compounding this, the document and Bloomberg data demonstrate that the banks that bought the swaps from AIG are mostly the same firms that underwrote the CDOs in the first place," the article notes.

The conflicts inherent in banks underwriting CDOs and then turning around and betting against those CDOs has been explored a lot in the media. You have to wonder what, if anything, can be done about it. The real loser was AIG, which perhaps should have examined the CDOs on which it was also asked to issue CDSs. AIG perhaps should have assumed that banks would act as sheep in wolves' clothing. 

For more:
- here's the article

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