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.