How did Goldman Sachs gain from this?

Discussion in 'Stocks' started by riddler, Apr 16, 2010.

  1. riddler


    how did Goldman Gain though? they let a hedgefund pick and structure the securities then that same hedge fund shorted because they chose bad did Goldman gain by this?
  2. Good question. If I knew that Paulson was loading up a subprime timebomb and going short and I had access to bundles of cash, I wouldn't know what to do either....
  3. riddler


    i guess Goldman was shorting?????
  4. GS just said..nothing wrong..up AH
  5. Hmmm, I find it highly unlikely that the do-nothing SEC would bring charges against GS, of all people, unless they had a really good case.
  6. LeeD


    It is clear that:

    1) GS securitization department securitized subprime (and other) mortgages and advertised them as "low-risk";

    2) GS prop trading was shorting these same mortgages big time.

    What is not clear is if there was a breach of Chinese Wall, namely whether the "securitization" people knew that prop trading was shorting in big size and prop trading knew there was still demand for such paper (from securitization people).
  7. Chinese Wall. Yea, I trust that. Its like a congressman telling an interviewer, "that golf trip to Pebble Beach that my patrons paid the private airfare and hotel accommations for has no effect on
    how I vote!" But, wasn't it the ratings agencies that stamped those sec. low risk?
  8. True. I wonder who pays the ratings agencies to rate the stuff they create? Hmmm.....not sure....
  9. LeeD


    That's when 2 bankers meet a canteen:
    - I'd love to buy you donuts but I can't. That will be a violation of court order.
    - Let' meet a a cafe behind the corner. I have some secret documents to exchange...
  10. the1


    When the Glass-Steagall Act was repealed in 1999 it tore down the Chinese wall so yes, the left hand knew exactly what the right was doing and acted on that information. We can thank Clinton, Greenspan, and Sandy Weill for this.

    #10     Apr 16, 2010