More from McClatchy on Goldman Sachs' secret housing bets. As you watch these two risk analysts discuss how they were disregarded when obviously fraudulent loans were being
rammed through the system, remember that one of the basics of criminal fraud is selling something you know to be worthless. I'm sure Goldman will say they were only doing the "prudent" thing by hedging their bets and to that I say "I've got some stuff for sale".
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Responding to Goldman Sachs
Goldman said it suffered losses due to the deterioration of the housing market and disclosed $1.7 billion in residential mortgage exposure write-downs in 2008. These losses would have been substantially higher had it not hedged. Goldman describes its activities as prudent risk management. Many Wall Street firms wound up taking losses. The question is, however, how did they manage to get through a couple of bonus cycles without taking accounting losses while showing "profits?"
The answer is that they sold a lot of "hot air" disguised as valuable securities. Goldman claims this was prudent risk management. In reality, Goldman created products that it knew or should have known were overrated and overpriced.
Earlier, Goldman denied it could have known this was a problem, yet acknowledged I had warned about the grave risks at the time. If Goldman wants to stick to its story that it didn't know the gun was loaded, then it is not in the public interest to rely on Goldman's opinion about the greater risk it now poses to the global markets.
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