Goldman Sachs in Fannie Mae lawsuit

Shanghai Daily reports:

GOLDMAN Sachs & Co helped Fannie Mae shift US$107 million of earnings to future periods by designing transactions aimed at deceiving investors, according to an amended lawsuit filed by Ohio Attorney General Jim Petro.

Goldman in December 2001 and March 2002 constructed two mortgage-backed securities for Fannie Mae totaling US$30 billion that deferred income and violated accounting standards, contributing to a US$15.8 billion overstatement of earnings by the biggest mortgage finance company, Petro said in an August 14 filing with a US District Court in Washington, according to Bloomberg News.

"Goldman Sachs directly participated in this fraudulent scheme as both the architect of the improper transactions and as the underwriter for them," Petro said in the filing. It also helped Fannie Mae "conceal the purpose and nature of the transactions from the public."

No one asked Henry Paulson during the hearings about this from what I can gather.I guess the New York Times doesn't care about corporate fraud when the "politically correct" are involved.