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 Newspapers 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.
To this day, I like many of you are waiting for someone, anyone to be held accountable for the market violations that lead to our economic collapse. Now with some digging by McClatchy there is supportive evidence at least for Goldman Sachs it was all one big game. If this tidbit of information isn’t enough to send you over the edge with anger, continue reading “Goldman secretly bet on the housing crash”
Also check out the latest from the FDIC regarding more bank failures; “9 more U.S. banks fail; $2.5 billion hit for FDIC fund“