Making big headlines in the last few days is the charge brought of Fraud brought by the SEC against Goldman Sachs as a result of the subprime and related financial fiasco that precipitated the existing world wide economic recession and the bail out of hundreds of companies. I ranted about the larceny behind the subprime mortgage debacle in a previous post.
The Huffington Post has a fascinating article explaining how one of these massive frauds by Goldman Sachs was orchestrated. In essence one man is alleged to have bundled $2 billion of subprime mortgages that he knew had a very high likelihood of defaulting into an investment vehicle called a "synthetic collateralized debt obligation"...isn't it amazing how these smart wall street types come up with names of investment instruments that sound important but are really JUNK! These debt obligations were sold to pension funds, banks and others and when the mortgage holders defaulted the whole scheme went under and ever one lost money, except of course for Goldman Sachs and the originator of this vehicle who made a fortune.
But the Goldman Sachs charges could be just the beginning of many other charges of fraud against these smart wall street types. Lets hope so!
The people who created these elaborate schemes and caused losses in the billions should be brought to trial.
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