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That's why we have courts, in this case it seems pretty clear that Goldman Sachs did materially misrepresent the nature of the instrument they were selling to t
by olefoo 17y ago
That's why we have courts, in this case it seems pretty clear that Goldman Sachs did materially misrepresent the nature of the instrument they were selling to their customers and colluded with Paulson to engineer something that Paulson could bet against.
Caveat Emptor is a fine thing and one should always be cautions when buying investment instruments,but outright fraud and deception through material omission strike at the credibility of the market itself.
- byrneseyeview 17y agoWas any of the fundamental data in their presentation incorrect? They listed all the bonds in the reference portfolio. Were some of the bonds themselves deceptive? If so, why would Goldman just step into the middle of the transaction, instead of shorting them? You're acting as if Goldman, by virtue of being lucratively evil, had predicted the whole subprime mess. But they lost money initially, made it back on hedges, then lost other money elsewhere. If they were as well-informed as they should have been to commit this crime, they would have made far more money in 2007-9.
- deleted 17y ago[deleted]
- jfager 17y agoGoldman stepped into the middle of the transaction because that's what they were paid (I think it was 15m?) to do. You're right that the buyer should have taken a closer look at the underlying mortgages themselves, but that's the other part of the story, that the ratings agencies that everyone trusted to do that work for them were either on the take, stupid, or both.