Skip to comments.How Goldman secretly bet on the U.S. housing crash
Posted on 11/01/2009 1:55:03 PM PST by crosstimbers
WASHINGTON In 2006 and 2007, Goldman Sachs Group peddled more than $40 billion in securities backed by at least 200,000 risky home mortgages, but never told the buyers it was secretly betting that a sharp drop in U.S. housing prices would send the value of those securities plummeting.
Goldman's sales and its clandestine wagers, completed at the brink of the housing market meltdown, enabled the nation's premier investment bank to pass most of its potential losses to others before a flood of mortgage defaults staggered the U.S. and global economies.
Only later did investors discover that what Goldman had promoted as triple-A rated investments were closer to junk.
Now, pension funds, insurance companies, labor unions and foreign financial institutions that bought those dicey mortgage securities are facing large losses, and a five-month McClatchy investigation has found that Goldman's failure to disclose that it made secret, exotic bets on an imminent housing crash may have violated securities laws.
(Excerpt) Read more at mcclatchydc.com ...
I think a lot of folks new the housing market was not sustainable at the rate it was going. Here in California at the height of the houseing market I could not afford to by my own house.
There’s a special place in hell reserved for these greedy bastards.
With the friends of Obama its like having tomorrow’s newspaper yesterday.
This is a fine line. Suppose you were the treasurer of a pension fund, and you called GS and said you wanted to buy some bonds rated AAA by Moody’s and S&P. They would say yes, they have some in stock, here’s the price.
The question that should have been asked was this: “Do you, Goldman Sachs, actually think these bonds are truly worthy of an AAA designation? What is your opinion and analysis of these securities?”
I would imagine most of the customers didn’t ask that.
It’s positively Randian. Give em what they want, and let them choke to death on their own puke.
GS would have just said that Moody’s assigned a AAA rating and that GS isn’t in the ratings business.
“...before a flood of mortgage defaults staggered the U.S. and global economies.”
Wait until the commercial defaults start rolling through...the Fannie and Freddie debacle has killed us...we just haven’t fallen yet...Thanks, Barney...
Goldman has been called A blood sucking squid stuck on to the face of humanity since 1920 ...........
and I agree.
Google Goldman Sachs Matt Tobias
Jon Corzine was from Goldman Sachs. So was Lawrence Summers.
Do you, Goldman Sachs, actually think these bonds are truly worthy of an AAA designation?
And Goldman Sachs would have just replied, “Shhhh,,,don’t tell *anyone else*,, but theres no way these deserve a AAA rating”? The bottom line is that they sold a AAA product which they new was garbage. Then they insulated theirself from the crash by instituting bankruptcy reform, and installing their tool,,,Obama. And he has done exactly what they want.
Our fully embracing and loving capitalism is the cloak these criminals hide behind. They pretend to be capitalists when it suits them, but they thrive by special relationships with the government.
Don’t call it bonds,,say it’s beef. A slaughterhouse labeling tainted “choice” as fresh “prime” would be prosecuted instantly. These arent capitalists,, they are criminals.
Here’s a great read from last year. It’s long but it’s a great report on the insiders view of the bankers.
Does this mean it's unethical to sell a stock if you think the company's no good?
Of course, if GS was being paid to give investment advice to the parties to whom it sold the junk, that would be wrong. But it seems that was not the case here. GS was simply the lesser fool selling to the greater fools. Nothing wrong with that.
McClatchey is just jealous.
They are no more greedy than you are, or those nurses that quit good-paying jobs to flip condos in Florida.
Moreover, GS is not a single monolith; it consists of largely independent divisions. Those at GS that were structuring and selling securities have no contact with those that were trading on the company account.
But facts don't matter to the anti-capitalist crowd. Envy of the "rich" is rampant, even here on FR.
Yep, they always envy the best.
I’ve never gotten on the horn and threatened the melt-down of financial markets unless I got favors from the Fed or Treasury.
So yes, they are more greedy than I am.