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Report: Goldman bet against own products
Goldman's undisclosed hedges against losses from the more than $40 billion in securities backed by at least 200,000 risky home mortgages it sold in 2006 and 2007 enabled it to pass most of its potential losses on to customers such as pension funds before the housing bubble collapsed, but they may have violated securities laws, McClatchy reported.
"The Securities and 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," Boston University economic Professor Laurence Kotlikoff told the news service. "This is fraud and should be prosecuted."
Columbia University law Professor John Coffee said bankers have much freedom to manage their assets, but added, "It would look much more damaging if it appeared that the firm was dumping these investments because it saw them as toxic waste and virtually worthless."
Lloyd Blankfein, Goldman's chairman and chief executive, declined McClatchy's requests to be interviewed.
Copyright 2009 by United Press International
This news arrived on: 11/01/2009
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Posted Comments:
11-02-2009 08:42
mockNbird wrote:
Biz
Laid off the risk on pension funds. Mmmmm, and they want us to think that a few ethics courses in college will change the face of business. The Muck Rakers cleaned up business back in the 20th Century and it is still diligent reporting that will clean this up. Only if punishment is more likely than large rewards will ethics become a part of business.
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