Goldman Secretly Bet On Housing Crash
A 5-month investigation by McClatchy Newspapers has found that Goldman secretly bet on the housing crash, went out and pimped the dickens out of assets it knew were junk, and may have broken securities laws in doing so. McClatchy found that Goldman...
# Bought and converted into high-yield bonds tens of thousands of mortgages from subprime lenders that became the subjects of FBI investigations into whether they'd misled borrowers or exaggerated applicants' incomes to justify making hefty loans.
# Used offshore tax havens to shuffle its mortgage-backed securities to institutions worldwide, including European and Asian banks, often in secret deals run through the Cayman Islands, a British territory in the Caribbean that companies use to bypass U.S. disclosure requirements.
# Has dispatched lawyers across the country to repossess homes from bankrupt or financially struggling individuals, many of whom lacked sufficient credit or income but got subprime mortgages anyway because Wall Street made it easy for them to qualify.
# Was buoyed last fall by key federal bailout decisions, at least two of which involved then-Treasury Secretary Henry Paulson, a former Goldman chief executive whose staff at Treasury included several other Goldman alumni.
Whether this really constitutes fraud depends on who knew what, and when did they know it.
How Goldman secretly bet on the U.S. housing crash [McClatchy] (Photo: C. Barr)
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Comments:
I do not vouch for the article as I *still* haven't read all of it. I've had it saved to read for months now.
That's why I call them Goldman Sucks.
There are-unfortunately-plenty of people in the GW Bush administration, as well as Obama's, that used to work at Goldman Sachs.
Then, there's the current governor of New Jersey, who led Goldman during the last great bubble in the 90s.
Sigh.
This "investigation" was done by a newspaper, not any sort of governmental agency.
Well, it's a good thing those responsible will be made to pay for their....oh, wait. Never mind, nothing to see here. Carry on.
Pete Rose got banned from the baseball hall of fame for betting against his own team...what will Goldman Sahs get?
@ConsumerPop:
Banned from the Wall Street Hall of Fame, perhaps?
This is old news, but just like Toyota's recent safety problems, it just hasn't been picked up by most of the mainstream media.
@ConsumerPop: More money, when their irresponsible practices nearly destroy the global economy... again.
@Nakko:
I didn't mean the comment to discredit the investigation, but I feel like it is still an important fact that wasn't clearly disclosed in the article. In hindsight, I can see how my use of quotes around investigation could have given the wrong impression.
this isn't news. We all know the big time capitalists are blood sucking scum bags. It isn't until their old and had their fill that some of them become philanthropists. And then magically we all forget how horrible they were.
Andrew Carnegie rings a bell, that guy was a super dick.
So will someone in the govt. do something? The media is proclaiming the whole financial mess to be in recovery. With CIT and 9 banks failing today, GM and Chrysler asking for more money and too many people out of work I'm just not seeing it.
There is way more going on inside these big banks nobody fully knows about yet. We could still see a sudden implosion.
@Esquire99: I wouldn't blame you even if you thought that being done by a newspaper was the same as by a Minister of Information. News outlets have failed tremendously in this area for far too long to be easily forgiven.
Stock tip for today: Invest in companies that manufacture torches and pitchforks.
Until they prove that the two-tier treatment was a deliberate attempt to defraud investors, there is no grounds for a fraud investigation. If you can't prove that Goldman had a gap between client-recommendations and legitimate analysis (reference Henry Blodget), it's just a hedge. Hedging large inventory positions is legal, common, necessary, and encouraged.
end of story..... move along nothing to see here.
oh elliot spitzer, had your whoring ways not brought you down you could be campaigning on your past hard work.
@futuresuperbowlMVPJayCutler: I will certainly agree on this point. Media outlets are profit driven corporations now, more interested in selling blood and sex than doing actual investigative reporting.
@The Cynical Librarian: I wouldn't be surprised if in a 100 years we all forget about this mess and there is private school's and public libraries dedicated to Goldman Sachs CEO's who donated billions for funding.
@Chris Walters: *instant rimshot*.
I could not agree with that more. However, wasn't what he did kinda sorta illegal?
I dont care about peoples dicking around (Ensign, Clinton) but I find it un-cool when the said dicking around is illegal or adversely affects other people (Sanford, Tyrol).
@Chris Walters: I read it . A long but outstanding read . Taibbi explains and talks about things like a normal person would talk about the subject . He gives examples you can understand .
Some highlights include Goldman basically had the first mutual fund but repackaged the same one around 3 times - rather Ponziskimish . Helped the 1929 crash along . In recent history they helped manipulate the energy and commodities markets with super high speed software .
It also noted how many ex Goldmansachs executives are in government regulating their industry and products .
And they did indeed play , package & resell bets on the housing bubble .
It's a long but understandable read .
@diasdiem: doh! i concentrated my holdings in pine resin & chicken byproducts. i'm screwed, aren't i?
@u1itn0w2day: I read it and loved it as well. Taibbi is great, and he got a lot of help for the article from Tyler Durden of Zero Hedge ([www.zerohedge.com]). I had not heard of the website before Taibbi's piece, but I am now a loyal visitor every day. Lots of great information that everyone should know.
@dragonfire81: You wouldn't happen to know where I can get some of this sex the media outlets seem to be selling? I've got a little money saved up and am feeling kinda horny. :D
@Chris Walters: I had a colleague who works in the financial industry tell me that the rolling stone article was whitewashed. Much of what was written wasn't actually researched and seems to be based on hearsay and conjecture.
@Skankingmike: I agree 100% about Carnegie, and many others. For those that don't know about the Homestead strike of 1892 and only know of Carnegie hall, here a little history for you: [www.bgsu.edu]
Unfortunately, the more things change, the more they stay the same. Goldman probably won't get a slap on the wrist, and the people in power will continue to be the same kind of pimps and whores that many of them have shown themselves to be, and it will be the rest of us that will have to make up for their lack of moral character...
@MostlyHarmless: Even when NJ thinks it can get away from Corruption they find ways to include us :P It was egg on NY face that smeared down onto NJ for prostitution.
@MostlyHarmless: The main reason why what Spitzer did was illegal is because like Chris Walters said, we pin morality to sex. Prostitution in and of itself is a victimless crime.
However, since it is illegal, and there is still a demand for it, it's basically turned into an underground slave trade. We have made ti so that prostitution = evil is a self-fulfilling prophecy.
The women are victims and are subjected to absolutely deplorable things, but if they do, they speak up, they go to jail, so they keep quiet. Once we have gotten over ourselves and our fear of our own sexuality, we can start doing something to help these poor individuals.
Anywaaaaaaay, back no topic. Goldman Sachs sucks. A lot of people like to point the finger at AIG as the main culprit of the economic ass-plosion, but they're really just a scapegoat. Granted, it was stupid of them to insure all the crap they insured. Even a casual investigation would have revealed those assets to be toxic, but Goldman Sachs are the ones that really made out like thieves. They got all their money back.
All the money AIG got from the government pretty much went towards paying for everyone else's losses. Again, not saying AIG isn't at fault here, but I think the lion's share of the fault lies with Goldman. THAT is who should have received the Cousumerist's coveted WCIA award.
@YOXIM: My question was not whether or not prostitution should be illegal or whether the current laws made sense or not.
My question was whether or not - under the current laws - did Spitzer do anything illegal.
This plays into my personal financial philosophy: "Never give your money to people who play games with money for a living."
I think you're safe. Got to have something to use after the swine are cornered with the pitchforks and torches.
Reminder to self, maybe invest in rails or bond futures for prisons!
In the name of all that's holy, break these financial holding companies into smaller pieces, and restore Glass-Steagall. Before they get even more back on their feet.
At this point in the game, we should no longer be surprised by their venal, corrupt practices: it's like the scorpion and the frog - it's simply their nature.
@Ronin-Democrat: You mean, if the FBI hadn't curiously blown way out of proportion a minor lapse into a major national scandal, hounding Spitzer out of office just as he was beginning to target the subprime sector?
Yeah, wouldn't that have been nice?
@Mecharine: Hearsay speculation. If you have specific points to refute rather than FOAF rumor-mongering, I'd like to hear them.
@Esquire99: Wait. Don't you usually decry government efforts over private ones? Yet here you're doing the opposite?
@dragonfire81: Good stories drive hits and sell papers as well as sensationalist junk. Seeking profit can be a public good sometimes. :)
That's nothing. Do a google search on Goldman sachs bubble.