4 ms·

Thats not really how the people doing the buying say it works. See in order to justify their compensation and fees they tell their investors about their detaile

Thats not really how the people doing the buying say it works. See in order to justify their compensation and fees they tell their investors about their detailed knowledge of the market. They talk about how their investment process works. They talk about the extensive due diligence they perform on their investments. They talk about their robust risk management procedures. The CDO was triple-A rated. The buyers, despite what they told their LPs, just bought stuff without thinking too hard about it. You don't pay bankers to inform you. This is true whether you are a pension fund, hedge fund or other asset manager. If you told your LPs, "Well we just ring up GS and ask them what to buy and then buy it" you would be out of a job very quickly.

mmanfrin 11y ago
"This resolution holds Goldman Sachs accountable for its serious misconduct in falsely assuring investors that securities it sold were backed by sound mortgages, when it knew that they were full of mortgages that were likely to fail." "serious misconduct in falsely assuring investors that securities it sold were backed by sound mortgages, when it knew that they were full of mortgages that were likely to fail" GS told these investors that these were safe investments when they knew they weren't. This is not a case of a pension fund calling up GS-General-Store and demanding to buy CDOs, this is a case of GS saying 'hey these are really safe investments for you' when they knew full well they weren't.
- spinlock 11y ago
  My problem with this is that we trying to fix finance by expecting Goldman Sachs to act as good citizens. Guess what will never happen. Goldman is not a good citizen. It is a market maker. It provides the function of creating financial products that people want to buy. Goldman also wrote the first swaps against the mortgages in these securities. Guess what, they didn't do it out of the goodness of their hearts. They did it for the fees. Goldman is one of the few actors in this mess that performed their jobs well. Rating securities was not their job. Determining if mortgages were sound was not their job. Their job was to package loans that were underwritten by other banks and sell them to _qualified investors_ who wanted to buy them. Goldman did it's job very well. Ratings agencies had the job of determining the quality of these securities. They did their job poorly. Investment managers had the _incredibly high paying_ job of selecting sound investments. They did their job poorly. Goldman is the only one who even comes close to being competent in this entire mess.

mmanfrin 11y ago

"This resolution holds Goldman Sachs accountable for its serious misconduct in falsely assuring investors that securities it sold were backed by sound mortgages, when it knew that they were full of mortgages that were likely to fail." "serious misconduct in falsely assuring investors that securities it sold were backed by sound mortgages, when it knew that they were full of mortgages that were likely to fail" GS told these investors that these were safe investments when they knew they weren't. This is not a case of a pension fund calling up GS-General-Store and demanding to buy CDOs, this is a case of GS saying 'hey these are really safe investments for you' when they knew full well they weren't.

spinlock 11y ago
My problem with this is that we trying to fix finance by expecting Goldman Sachs to act as good citizens. Guess what will never happen. Goldman is not a good citizen. It is a market maker. It provides the function of creating financial products that people want to buy. Goldman also wrote the first swaps against the mortgages in these securities. Guess what, they didn't do it out of the goodness of their hearts. They did it for the fees. Goldman is one of the few actors in this mess that performed their jobs well. Rating securities was not their job. Determining if mortgages were sound was not their job. Their job was to package loans that were underwritten by other banks and sell them to _qualified investors_ who wanted to buy them. Goldman did it's job very well. Ratings agencies had the job of determining the quality of these securities. They did their job poorly. Investment managers had the _incredibly high paying_ job of selecting sound investments. They did their job poorly. Goldman is the only one who even comes close to being competent in this entire mess.