Goldman Bet on Housing Crash

Goldman Sachs sold more than $40 billion in securities backed by 200,000 risky home mortgages in 2006 and 2007, but the nation's premier investment bank never told buyers that it was secretly betting that U.S. housing prices would drop. Goldman's clandestine maneuvers enabled the bank to pass most of its potential losses onto others before mortgage defaults flooded the world economy. A McClatchy investigation out Sunday reveals that Goldman's failure to disclose deals may have violated securities laws. "The Securities & Exchange Commission should be very interested in any financial company that secretly decides a financial product is a loser and then goes out and actively markets that product or very similar products to unsuspecting customers without disclosing its true opinion," said one economist. "This is fraud and should be prosecuted." But another expert interviewed by the newspaper chain indicated that, depending upon what executives knew, the actions could have been legal.

Read it at McClatchy

Source: The Daily Beast

Related:

From The Real News Network:

How Goldman secretly bet on the U.S. housing crash

Goldman didn’t tell buyers of $40 billion in securities it was secretly betting the other way.

Goldman Sachs' Secret Bets

McClatchy's Greg Gordon reports that Goldman knew that mortgages were not being properly reviewed.