Posted on 12/05/2007 10:27:44 AM PST by Clintonfatigued
US Treasury Secretary Hank Paulson had thought that the subprime crisis would be contained last spring and since August, with the onset of the subprime-related credit crisis, he has been involved in various proposals to rescue the financial sector from a trauma of its own making and also some of the at-risk of foreclosure householders.
Meanwhile, the top US investment bank Goldman Sachs has been on a roll as rivals such as Merrill Lynch have been mired in the subprime fallout. The funny thing is that when Paulson headed Goldman Sachs, until the summer of 2006, the bank was as active in the packaging/securitization of subprime debt as its rivals.
According to the website ABAlert.com ( “asset-backed alert”), Goldman Sachs was one of the top 10 sellers of CMO’s (Collateralized Mortgage Obligation - a financial debt vehicle that was first created in 1983 by investment banks Salomon Brothers and First Boston. Legally, a CMO is termed a special purpose entity that is wholly separate from the institution(s) that create it) for the last two and a half years and it may have sold about $100 billion in CMO's in that period, according to ABAlert.
Goldman Sachs CEO Lloyd Blankfein said last June that low interest rates and narrow yield premiums on riskier debt fueled economic growth for the past four years by boosting investment in real estate, emerging markets and LBOs (Leveraged Buy-outs).
``The biggest risk we face, and there are a lot of things that contribute to this risk, would be a very big crisis in the credit markets,'' he said. ``Some of that is supply-demand fundamentals, but a lot of it is sentiment.''
(Excerpt) Read more at finfacts.com ...
There is going to be a temporary mortgage interest rate freeze to help some cash-strapped homeowners who are on the edge. But for most part, government involvement should be minimal.
This will get worse before it gets better. How much worse is anyone’s guess.
Oh, that was GOOD! We MUST watch out for those dodgy debts. Especially the ones with the really good names.
Sure is handy when the CEO of Goldman Sachs becomes the Secretary of the Treasury.
Ben Stein’s piece
http://www.nytimes.com/2007/12/02/business/02every.html?_r=1&oref=slogin
Doggie Kass rebuttal
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.