By Jay Heflin - 07/23/10 03:34 PM EDT
“The City and County lost money due to the reckless behavior of Goldman Sachs and their client, hedge fund manager John Paulson, and they deserve to get that money back,” Loebsack said in prepared remarks.
The congressman claims $2.6 million was lost in the failed structured investment vehicle called Rhinebridge, which contained the Abacus security that the SEC claims was designed to ultimately fail.
The commission earlier this year announced its investigation into the Abacus security. It found the fund was created to fail and that Goldman did not inform their clients, including Cedar Rapids and Linn County, that it was profiting from the security’s demise.
“Wall Street fat cats cannot just gamble away Linn County taxpayers’ hard-earned money and get away with it,” Loebsack said. “This is unacceptable and we want our money back.”
To that end, the congressman in a July 22 letter asked Schaprio to refund the money lost to the Iowa areas. He contends the refund would help the regions recover from a recent, historic flood.
“The Floods of 2008 left 85 of 99 counties presidentially declared disaster areas, caused billions of dollars in damage, and wrecked thousands of homes on businesses,” Loebsack wrote. “Cedar Rapids suffered the most extensive damage of any city in the state. That the City and County, and therefore its citizens who have additionally suffered through this natural disaster, have lost money as a result of fraudulent actions related to Abacus is certainly one of the many tragedies caused by unchecked Wall Street gambling.”
The letter goes on to request an explanation if the reimbursement is beyond the scope of the settlement with Goldman.