Pro Publica has reported that Goldman Sachs wasn't the only bank hawking built-to-fail mortgage investments, and now it has emails accusing Merrill Lynch of the practice. The Dutch bank Rabobank is suing Merrill, and as soon as it saw the charges against Goldman, it sent an email to the US judge in its case, saying that Merrill "engaged in precisely the same type of fraudulent conduct."
Merrill responded with an oh-no-we-didn't email to the judge, followed by an oh-yes-you-did response from Rabobank, which ProPublica recounts here. One of Merrill's points is that it was itself a big investor in the $1.5 billion deal known as Norma, which should be proof enough that it didn't want the deal to fail. But fail it did, and "losing money is not a defense to fraud," said Rabobank. "Indeed, the SEC charged Goldman with fraud notwithstanding that it reportedly lost nearly $100 million." (Read more Merrill Lynch stories.)