Monday, March 1, 2010

Dirt digging on Goldman Sachs

Barry at the Big Picture provided a link to a very controversial article.  I have never read McClatchey's new before, so I don't know their reputation.  The article passes the sniff test--the writer clearly doesn't like GS, but his reasons seem to be based upon actual injustices performed.  If he has a personal axe to grind that didn't come through to me.

The author attempts to prove that GS knew that the CDOs were garbage destined to implode before they sold them to their clients.  Then they hedged them in a way that would let GS profit when the products they had just sold tanked.  If provable, this is certainly a violation of basic professional ethics.  It ought to be illegal, but I don't know the law here.  Certainly if I were a GS client who had lost a bundle on CDOs I would be out for blood.  I'm guessing that it is only a matter of time before a class-action suit is filed against GS by its customers.

The FED and Treasury failed the taxpayers and GS's clients.  Let's see if the SEC and courts can find justice.

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