Posted on 04/03/2011 12:17:36 PM PDT by NormsRevenge
WASHINGTON (AFP) – The Senate will soon issue findings of a probe of the US mortgage meltdown that fueled the global financial crisis, with Goldman Sachs likely to face fresh embarrassment over its role, the Wall Street Journal reported Sunday.
The Senate Permanent Subcommittee on Investigations, whose high-profile inquiry commission subpoenaed Goldman's and other executives last year, is due to release its report on the subprime implosion of 2007 and 2008.
The paper, citing people familiar with the matter, said the report was expected to release emails from securities firms that developed or sold subprime mortgages and financial vehicles including collaterized debt obligations (CDO).
CDOs were used to help Wall Street firms bet against the housing market. When the housing bubble burst, several of the top CDOs were downgraded to "junk" status, and their values plunged.
Goldman, the Journal reported, created CDOs in 2006 and 2007 to shield its exposure to the US housing market, and has been accused of making large bets against the market while selling bullish positions to group that were not expecting the market to fall.
People familiar with the matter said Goldman and Deutsche Bank -- both of which have been criticized for misleading investors in the housing market -- were expected to draw particular scrutiny in the report, the Journal said.
In January, Goldman said it was renewing its commitment to the "primacy" of client interests, and laid out 39 recommendations stressing greater transparency in how the company does business, especially with regard to its own private trading and potential conflicts of interest.
The Journal said the Senate investigation's findings would likely expose bad blood between Goldman and Morgan Stanley, another Wall Street giant, over their roles in a deal involving a CDO called Hudson Mezzanine Funding 2006-1.
(Excerpt) Read more at news.yahoo.com ...
It will be a two word report:
Bush’s fault.
Absolutely. And when I hear people whining for the huge financial firms on the other side of these synthetic CDO trades, I have to laugh.
Is it time to get back into the housing market?
The estate agents are waving foreclosure lists in my face
and offering deals with 3.5% down.
Do you understand that the folks taking the other side of the Goldman trades were large institutions and sophisticated investors. One side won the bet, the other side lost. You, like the author of the article. are trying to create the misimpression that Goldman clients are small unsophisticated investors. They are not. Goldman clients are only large personal, corporate and institutional investors.This happens all the time on Wall Street and there is absolutely nothing illegal or fraudulent about it.The real problem is the government allowing the amount of leverage that the bets were made with, not the bets themselves. Overleveraging is what created the institutional crisis, not trading.
IMHO the worst is yet to come...a lot of the banks are holding back on their REO’s (real estate owned) so as not to glut the mkt. I woulnd’t invest in any foreclosures unless you are sure you can get a clear title.
I notice you never got an answer. Lol.
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