"Goldman 'inflated Lloyds bail-out costs'"

[WhiskeyGirl]

Goldman Sachs hoodwinked taxpayers out of millions of pounds by pushing up the cost of Lloyds Banking Group's bail out, City sources say.

The accusation that the Wall Street bank ripped off its British clients comes just a week after it was charged with fraud in the US.

The bank is accused of putting its own interests before that of clients, as it places big bets on financial investments to bolster its profits.

In what will be seen as a clear conflict of interest, it emerged yesterday that Goldman controversially acted on two sides of a £23.5bn fund-raising deal to put Lloyds on a sounder financial footing last Autumn. This was unbeknown to the state-controlled bank.

The latest revelation will increase the pressure on the Financial Services Authority  to take action against the American investment bank.

The watchdog has already announced a formal probe into Goldman Sach's activities on UK shores, after being concerned about damaging conflicts of interest.

Goldman Sachs said: 'There was no conflict of interest. Our position has been seriously misrepresented.'

Goldman steadfastly rejects the allegation that it misled its clients over a sub-prime mortgage investment deal that was set up by French trader Fabrice Tourre. The bank also points out that it has 'Chinese walls' in place to prevent conflicts of interest.

But the vast amount it consistently pulls in in profits, and the billions that it pays to its staff mean that it has raised eyebrows in political and regulatory circles. On Tuesday, Goldman revealed a £3.6bn pay and bonus pool for its bankers for just three month's work.

Read more: http://www.thisismoney.co.uk/markets/article.html?in_article_id=503332&in_page_id=3&ito=1565#ixzz0ly3cAP1W

Why do they call them "Chinese Walls"?  Are they sturdy?  Like the Great Wall of China?