GOLDMAN SACHS: “MULTIPLIED THE EFFECTS
OF THE COLLAPSE IN SUBPRIME”Henry Paulson, the CEO of Goldman Sachs from 1999 until he became secretary of
the Treasury in 2006, testified to the FCIC that by the time he became secretary many
bad loans already had been issued—“most of the toothpaste was out of the tube”—
and that “there really wasn’t the proper regulatory apparatus to deal with it.”96 Paulson
provided examples: “Subprime mortgages went from accounting for 5 percent of
total mortgages in 1994 to 20 percent by 2006. . . . Securitization separated originators
from the risk of the products they originated.” The result, Paulson observed,
“was a housing bubble that eventually burst in far more spectacular fashion than
most previous bubbles.”97
The full FCIC report can be found here
The Parker/Spitzer program on CNN on Thursday, January 27, 2011 discusses the report.
You can see the video here
It is important to add some information about the creation of the FCIC which added to its weakness as a form of inquiry. Thank you for the comment left by Anonymous. See Barry Ritholtz (The Big Picture) discussion on Weill's column found here.
1 COMMENTS:
The money used to cover up their losses could have been helping these people! As an entity goldman is garbage.
The suburban sunbelt is the scene of terrible poverty
When property prices began to drop, the effects on the area were particularly pernicious. Those in the building or tourism trades, as well as retirees living off their investments—a huge share of the population—quickly felt the pinch. Unemployment soared, from 3.1% on average in 2006 to 13.4% in January of last year (it is 12.3% now). It would be higher still had some not moved away, causing the population of the county, like the state, to fall for the first time in living memory in 2008.
That has left people like Ken struggling to keep body and soul together. He describes how he gave up his cooking job to look after his ailing mother in 2007. When he started to look for work again a few months later, he could find only a part-time job, which soon evaporated. He had no savings, so could no longer afford to rent. He wound up in a tent in a camp for the homeless called Pinellas Hope, which was set up by the Catholic church in the town of Clearwater, 50 miles up the coast from Sarasota. He is relatively lucky: Steve Barton, a carpenter from Ohio, is one of several hundred living in the woods outside Venice, 20 miles south of Sarasota. He has been out of work for over two years, so is no longer eligible for unemployment payments. He lives entirely off charity.
In addition to the cooks, chambermaids and construction workers who hit the skids soon after the recession began, many former professionals have now exhausted their savings and are beginning to fall back on local charities. Angie Sammann, a former loan officer at a bank, is another of the tent-dwellers at Pinellas Hope. She tells the story of how she lost her job due to illness, then her apartment, then part-time work in a deli, then the room she was renting and finally the possessions she had put in storage. She got a month’s work from the Census Bureau last year, but otherwise has not seen a pay cheque for over a year. “I don’t care if I scrub toilets,” she says, “I just want a job.”
http://www.economist.com/node/18010603
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