Fraud in the collateralized debt obligations

Citigroup Inc. is currently embroiled in a separate SEC battle over a $1 billion ABS CDO it created. The agency proposed a $285 million settlement of charges that Citigroup misled investors, but because no one was required to admit wrongdoing, U.S. District Court Judge Jed Rakoff is refusing to approve the accord.
Interestingly, the authors found that the performance of bonds in Goldman's Abacus CDOs, while undoubtedly bad, was actually better than average among all bonds that had been similarly packaged. More broadly, the bonds in CDOs created by big, highly regulated U.S. and foreign banks performed significantly worse than those in CDOs issued by investment banks or smaller firms.
In other words, the Goldman and Citigroup cases are only the tip of the iceberg. Bloombeg

Fraud, pure and simple and years of legal issues will follow this report.