Matthew Goldstein of Reuters has been sniffing around Goldman Sach’s Greywolf and Timberwolf transactions since last August.

Timberwolf is the deal immortalized today by grandpa Carl Levin’s, D-Mich., repeated quoting of a Goldman executive calling it a “shitty deal.”

Greywolf was a collateralized loan obligation put together by Goldman (an Audit funder) for Greywolf Capital Management, a group of ex-Goldman traders. Goldstein reported on it last week, saying that Goldman “may have used a subprime mortgage-linked security that is the focus of a U.S. civil fraud lawsuit against the bank to unload other complex bonds it created.”

Basically, Goldman creates the Greywolf CLO for its ex-traders, then it creates the Abacus CDO and unloads a big chunk of Greywolf into Abacus, raising possible self-dealing questions for Goldman.

Derivatives consultant Janet Tavakoli said the use of Abacus funds to buy Greywolf assets may have posed a conflict of interest for Goldman. The Greywolf link could prove problematic if institutional buyers were not told Goldman underwrote the Greywolf deal, or did not know that Goldman had relevant information about the quality of the Greywolf portfolio, she said.

“Goldman’s paw prints were all over this,” said Tavakoli. “There is a conflict of interest between investors and underwriters who are putting their own deals into CDOs.”

Timberwolf, meanwhile, was also created by Goldman for its ex-traders at Greywolf Capital Management. Goldman unloaded $300 million of that toxic deal to Bear Stearns and then started marking it down almost immediately, Goldstein reported in August. Goldman happened to have a bunch of shorts on Timberwolf:

People close to the Bear funds also told Reuters last summer that Goldman’s decision in April 2007 to begin marking down the value of Timberwolf securities may have hastened the funds’ demise.

The quick markdowns also may have benefited Goldman, which was shorting portions of the Timberwolf deal by taking out credit default swaps on some of the subprime mortgage-linked securities that were tied to the deal.

Speaking of self-dealing, or as Zero Hedge puts it: “how much of its own toxic crap (had) Goldman repackaged and sold off to Bear in this last ditch effort to clean up its books.”

Goldstein reports today that federal prosecutors on the Bear Stearns’ hedge-funds case eyeballed the deal:

Federal authorities examined the deal because Goldman sold a $300 million portion of the CDO to the Bear funds in March 2007. Prosecutors were particularly intrigued by the fact that Goldman’s mortgage trading desk began marking down the value of Timberwolf securities within a week of selling that $300 million slug to the Bear funds and smaller pieces of the deal to other institutional investors, the sources said.

All very interesting.

Greywolf and Timberwolf: shitty deals indeed. At press time, alas, there was no word on Blackwolf:

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.