Loebsack tells SEC to use Goldman Sachs $550 million settlement to reimburse landfill agency

CEDAR Rapids – U.S. Rep. Dave Loebsack is urging the Securities and Exchange Commission to use part of a $550 million settlement with Goldman Sachs to reimburse Cedar Rapids and Linn County for investment losses connected to the firm.

The city and county lost money due to the “reckless behavior” of Goldman Sachs and its client, hedge fund manager John Paulson, Loebsack wrote in a letter July 22 to SEC Chairwoman Mary Schapiro. “They deserve to get that money back.”

Loebsack, a Mount Vernon Democrat, encouraged Schapiro to use her authority under the financial reform law signed July 21 to ensure such “complex and fraudulent securities and actions do not continue.”

Loebsack spokeswoman Sabrina Siddiqui explained “It's our position that if the SEC doesn't think that we don't deserve to be reimbursed, then we'd like to know why.”

Loebsack is seeking the reimbursement for a loss the Cedar Rapids/Linn County Solid Waste Agency sustained from a 2007 it investment in commercial paper. That investment, called Rhinebridge LLC, has been tied to a larger investment called Abacus – the basis for the SEC litigation with Goldman Sachs.

The solid waste agency's investment was to have paid $6 million over the course of a few months, but did not. The agency had recouped part of the investment in 2008, lessening its loss to $2.64 million.

Loebsack wants the SEC to use settlement funds to make the solid waste agency whole.

Goldman Sachs' behavior is unacceptable “and we want our money back,” he wrote to Schapiro.

Loebsack also urged the Department of Justice to pursue criminal penalties in the case.