The Case Against Goldman

http://www.washingtonpost.com/wp-dyn/content/article/2010/04/16/AR2010041602161.html?hpid=topnews

"Wall Street bank sold investors a subprime-mortgage investment that was secretly designed to lose value. "

"investments derived from home loans made to borrowers who couldn't afford the houses they were buying. "

"Goldman Sachs misled its clients, goes beyond, raising the possibility that the bankers who devised these investments knew they were selling toxic financial products that could endanger the financial system but were concerned only with the fees they would earn by doing so."

"a senior Goldman Sachs executive recognized in an e-mail that the implosion of the housing market was imminent. "The whole building is about to collapse anytime now," concluded Goldman Sachs vice president Fabrice Tourre, who allegedly created the investment at the core of the case. "

"John Paulson, who personally earned billions of dollars as his firm Paulson & Co. bet against the housing market as it went bust."

"Goldman Sachs created and marketed a financial product known as a collateralized debt obligation, often referred to as a CDO, whose value was linked to that of home loans. The agency claims that Goldman Sachs didn't tell investors that Paulson & Co. helped the bank assemble the CDO while the hedge fund at the same time placed bets that it would lose value."

"Goldman wrongly permitted a client that was betting against the mortgage market to heavily influence which mortgage securities to include in an investment portfolio, while telling other investors that the securities were selected by an independent, objective third party."

"Paulson & Co. paid Goldman Sachs $15 million for structuring and marketing the CDO. Investors in the CDO lost more than $1 billion, according to the agency. "

"If the conduct alleged by the SEC went beyond this specific instance and was common on Wall Street, this disclosure could upend a popular notion about the causes of the financial crisis. It could mean that bankers may have been intentionally creating toxic assets, looking only to generate fees for their employers and bonuses for themselves without worrying whether it would cost investors or clients or pose a risk to the nation's financial markets. "

"The prevailing view has been that Wall Street's biggest banks, perhaps ignoring common sense, bought into the widespread notion that housing prices would continue to rise for the foreseeable future, and that these firms were as surprised as anyone by the sudden collapse in the housing market. "

This is what happens when the government deregulates and nobody is watching the children (I mean bankers).