GOLDMAN SACHS DEFENDS COLLATERAL CALLS TO AIG

Goldman Sachs has told the US Financial Crisis Inquiry Commission that its collateral calls to AIG during the financial crisis of Q3 2008 were reflective of the prevailing economic situation at the time. "We made those collateral calls based on prices that reflected the deteriorating conditions in the market for the underlying collateral in Residential Mortgage Backed Securities and CDOs", Goldman said. The investment bank said that its pricing was based on the best available market information, claims a Reuters report. It added that "the foundation of our approach to risk management is based upon disciplined mark-to-market accounting". Goldman also claimed that until December 2007 AIG did not have an internal pricing system to value the securities on which it sold credit protection.