says ikb was a victim, but ikb is not considered a victim in king county, washington, home to seattleb was selling. it lost more than $20 million. and these are king county's libraries, also victims of that losing bet. >> we did have to scale back the operation of the library system and to look more carefully at all the things that we're doing. >> reporter: king county is suing ikb, the very company the s.e.c. says was a victim of goldman sachs. the county is also suing moody's and standard and poors, those rating agency told king county its were aaa safe. as for jack's house? it failed to generate any bidder at monday's foreclosure auction. it go back to another german firm, deutsche bank. and the big gamblers in the mortgage mess, ikb lost so much money that german taxpayers had to bail it out. and back here at home, the american taxpayers provided the nation's biggest banks with bailout money including $10 billion with goldman sachs which has been repaid. ali? >> all right, allan, thank you forea very good explanation of why we're all connected to this thing and why i'm here report

>> > >ikb -- i think ikb had a total position of something like 150 and these numbers i think are in the complaint. i think the hca ended up having a total position that was multiples of that. i seem to recall the nine hundreds of millions. ikb i think had 150 and aca had 952. >> and we are talking about these folks on the long side of these things went paulson was on the short side. >> correct. >> and when it was marketed to ikb -- because this is a question that has been brought up. we're talking about transco and -- disclosure and transparency and conflict of interest and all of that stuff, but was ikb told that paulson was selected as part of the securities? >> all i have his the testimony -- the information that we have from the torah. i do not have independent knowledge of it. -- from the tool our. i do not have intended knowledge of it. in rugs are listed off for five different arrangements that goldman have and i believe i agree with the senator who said that there should be for five other folks up here with you. i have been sitting here trying to really figure out a good ana

was ikb there? >> senator -- >> answer my question. was ikb there? >> no. >> was ikb going to be a betor, too? you put him in the folks with the folks who were deciding what they were going to bet on. who put him in the room? >> we hadn't discussed this investment yet. >> okay. so, when you did discuss the investment at ikb, did you say we had a client, by the way, we're the house. we're supposed to be the bookie, but you need to know that we decided to let the client who wanted to bet against this deal, we decided to put them with the people in the room. did you tell ikb about that? >> i didn't tell -- >> do you see how that seems weird? >> ikb knew it was a synthetic transaction for which by construction there was -- >> i need somebody to acknowledge that that sounds weird. one side is coming to you to place a bet short and you put them in the room with the people who decide to bet short on and the people you sell the transaction to never gets to know that paulson is in the room picking the stuff? that just seems bizarre to me. >> senator, if i may

they had more people that still payments to ikb and others.the underlying bonds referenced in the deal blew up, the buyers would are to make payments. >> supposedly -- >> back to paulson. >> people were excited about taking paulson's money. he looked like a chump. >> we were short ikb in 2007 because we looked at -- we looked at what they were doing. it was madness. it was absolute madness. and they also were basically taking a german bank balance sheet and leveraging it up and going long, all this toxic stuff to make spread. >> the problem isn't that paulson bet short and another institution bet long. the problem is that a bank, a bank that effectively the government needs to come in and bail out, was taking stupid -- making stupid bets. >> exactly. >> i think if you had to criticize goldman for anything, you could argue it's a suitability question. almost like if you think of ikb as a widow or orphan, maybe you should never sell stuff to them where their upside is to make 80 points and -- >> sell to a german bank instead of a u.s. bank. that

. >> if i had a mortgage -- the likes goldman sachs sales it to ikb. they think they are being really smart. >> all along, i am starting to not be able to pay at some point. three years into it, i go from 2% to 12%. >> i cannot refinance and all of a sudden i default. >> we are sitting there watching this and betting that it will all collapsed. let me finish this paragraph. the paragraph -- >> don't say it is all too complicated, because it isn't. >> it is not because it is complicated, but i will read the rest of it and try to figure all this out. here is what i am getting at. the party against -it was at thi saw that, i said there was $180 billion from aig that subsequently went to bail out goldman sachs. >> yes, for vets. there were bets. what's in repulsive and been bernanke, why did the two of them -- milan >> >> because all of the wall street firms were on the other side of those bets. if aig did not pay off the debts, the firms would have seen the law spirit goldman sachs had lost on its debt -- the firms would have seen the loss. goldman sachs

for ikb. at the moment, the fsa are saying they're working with the s.e.c., they're looking at what the s.e.c. unravels, and indeed, so are rbs, which of course could have its own civil case against goldman sachs if these allegations are proved correct. we'll pass it back to erin now. >> thanks so much to you, steve. we appreciate it. we want to bring in two old wall street hands to talk about goldman sachs and what it means for the overall market. vince farrell and michael farr. obviously, this is the fabled farr-farrell combination. michael farr, goldman sachs news broke on friday and you sold the stock on it. are you rebuying did now today because you thought it was oversold or is this a bigger picture call? >> erin, good morning. it wasn't unusual that we sold it because it violated one of our for-sell disciplines and the fourth one is disingenuous management, even the appearance of disingenuous management sends us and our money to the sidelines until the cloud clears. this cloud hasn't cl

. >> goldman sachs and they sell it on to ikb in -- a german bank in dÜsseldorf who thinks that they'reg really smart investing in sub prime mortgage bonds. >> and all along i'm starting to not be able to pay at some point. i mean three years into it i go from two percent to 12 percent. >> the teaser rate is over

>>> we're going to talk more about the political angle, the firm is ikb, commercial bank located in dusseldorf. >> geniuses. >> your point for the market, which, by the way has recovered quite a bit. if it become also bigger, it could be a damper at the whole market, or a headline that matters, but just an excuse to sell? >> erin, from the mind of a portfolio manager, there's sort of complex issues raised here, the potential to kind of envelope a bunch of other companies, and then you have to explain why you sort of stayed in your position. i think this will be an excuse for investors to de-risk. the market has had such a big move, i think from a tactical perspective, i don't think i would be buying the dips right now, i would be making a shopping list, knowing that the economy is strong, there's a lot of pent-up demand, but there has been to be some selling down. hedge funds are going to be worried about each other, so i think this will cause people to want to de-risk for a couple weeks. >> tom, when you say derisk, obviously you're talking about risks, we've seen the dallas gotten down, oil,

ikb from the kgb. we are enamored of financial institutions that think derivatives are about whether the words derive from anglo-saxon or latin roots. we like bankers who when they hear the term "synthetic" wonder if that means the shirt's 50% poly and 50% cotton and how it will hold up under many washings. that's why we're not going to be looking back like lot's wife did and risk turning ourselves into a pillar of salt and instead we're going to rake in the benjamins. by finding the next huntington banc shares, which just today reported a fabulous -- yes indeed, to use the cliche term -- blow-out manster quarter. sure we still like citigroup very much. we liked it at $3.15. and i'm going to see him at the white house correspondents dinner. but i'll just give him a little heads up now. memo to treasury secretary tim geithner let me trade this one to citigroup cramerican style. i think you should hold the 30% stake in citi until the stock hits $6.15, one of my preliminary targets, then at 6.15 what you

did you tell ikb that? >> suggestions from different parties. >> let's stop right there.what do you guys think of that? >> it's interesting because i sit behind focus groups, panels all the time. and she looks exactly like those middle american women out there when talking about sort of their frustration with what is going on with wall street and the banking industry. i think she is giving perfect voice and face to that right now. >> that's perfectly aligned with a lot of the frustrations a lot of americans feel. i don't know if you play poker, i would love to play poke were claire mccaskill. you would always know whether she has a good hand or a bad hand. she has a hard time hiding her emotions. that's a good thing in politics sometimes. >> how do you she can do that at the hearing? >> i'm going to take my chances. i think i could make a little money. >> you're watching senator mccaskell, madden invitious to the game. we think our politics are feisty, and we have watched some pretty rough things in recent months. let's go to the ukraine. a little egg throwing on the floo

also the question, erin and mark, ikb, the german bank that was ultimately bailed out by the taxpayers, they didn't know paulson was involved and the s.e.c. says that was fraud. >> also, scott cohn, i guess it's interested, on the goldman side of this this morning with the relatively junior banker involved in this is losing his securities licenses, is now on leave of absence. so, it's possible that they could be clearly setting up to say, well, if he did something wrong, it wasn't with our approval, and we'll let him take the fall. >> and yet, they haven't. they haven't cast him overboard yet, and that may be telling. i mean, they still so far are embracing him, maybe not his e-mails and the tone of them, but they have not thrown him overboard yet. >> it will be interesting. greg on the call yesterday seemed to be little bit distance. we're back to earnings. four dow components reporting. on the list, boeing posting earnings of 70 cents a share and mcdonald's posting $1.03 a share, as mark reported. alex handleson from c.k. cooper and company covers boeing. alex hamilton on boeing and