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How did Goldman Sachs gain from this?
- Thread starter riddler
- Start date
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....
GS just said..nothing wrong..up AH
Quote from wareco:
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.
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).
Quote from 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).
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?
That's when 2 bankers meet a canteen:Quote from omegapoint:
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?
- 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...
When the Glass-Steagall Act was repealed in 1999 it tore down the Chinese wall so yes, the left hand knew exactly what the right was doing and acted on that information.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.
Quote from 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).