It was reported last month that Goldman Sachs caused an uproar in California by recommending credit-default swaps on municipal bonds when Goldman was also the managing underwriter of municipal bonds in California. See "Goldman Markets Munis, Sachs Issues Credit Default Swaps" on Insurance Claims and Issues, Categories: Bond Insurance, Market Performance, November 12, 2008 at www.insuranceclaimsissues.typepad.com.
It is now reported that Goldman Sachs has recommended that its customers purchase credit-default swaps -- from Goldman Sachs, of course -- to protect against the risk of bond defaults in at least 11 States: Florida, Connecticut, Hawaii, Illinois, Massachusetts, Michigan, Nevada, New Jersey, Ohio,.and Wisconsin in addition to California.
Goldman Sachs reportedly "has acted as lead managing underwriter [of municipal bonds] in all the states it recommended betting against, except Hawaii." Joe Mysak, "Goldman Draws Ire For Advising Default Swaps Against New Jersey" (Bloomberg.com, Wed., December 10, 2008).
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