4 ms·
If you read the complaint, it specifically says 55 of Paulson's original list made it into the final portfolio right off the bat, and the final 37 were negotiat
by jfager 16y ago
If you read the complaint, it specifically says 55 of Paulson's original list made it into the final portfolio right off the bat, and the final 37 were negotiated between Paulson and ACA and subject to Paulson's final approval. Yes, ACA also had to sign off, but they were hardly 'independent' - Goldman was paying them to build this thing at Paulson's request.
So it's clear that ACA sucks. I've never argued that wasn't the case. But ACA's suckage in no way bears on the fact that Goldman plainly lied about the selection process to longside investors (who clearly suck, as well).
In summary: everyone involved sucks, except maybe Paulson. Goldman's the only party that criminally sucks, though, at least that we know of right now.
- yummyfajitas 16y agoObviously it was subject to Paulson's final approval. If ACA did not construct a short position which met Paulson's needs, Paulson would not participate and there would be no CDO (unless another short side was found).
- jfager 16y agoSo what are you arguing, exactly? If Paulson had to approve it, and it wouldn't have existed otherwise, how could Goldman possibly represent it as being independently selected by ACA and not be guilty of fraud?
- yummyfajitas 16y agoACA independently selected the best set of long positions that Paulson was willing to short. That's how almost every synthetic CDO is constructed, and was almost certainly disclosed in the legalese of the contract.
- jfager 16y agoBut ACA didn't know Paulson was the short. They thought he was going long, because that's what Goldman told them (and part of what the SEC is suing Goldman for). It was Goldman's responsibility to find the shorts, not ACA's.