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Goldman Sachs Paper

In: Business and Management

Submitted By skiyalater
Words 1813
Pages 8
Table of Contents

Introduction/Executive Summary Page 1
Shorting CDO’s Page 1-2
S.E.C. Investigations Page 2-3
A.I.G. Page 3-4
Greece Debt Page 4
Conclusion Page 4-5

Best of the Worst ` Goldman Sachs, the famous investment company, is universally acknowledged as a super star on Wall Street and has been honored with a great reputation for its incredible profitability. However, as a symbol of Wall Street, Goldman has also been featured in greedy and sophisticated traits by numerous critics. The events of 2008 and the recent Greek debt crisis have brought to the public’s attention the dangers of moral hazard and its implications. Some investors have said that one can always see Goldman’s figure in a financial crisis. Indeed, in the latest two destructive financial crisis-the US subprime crisis and European Debt crisis, Goldman Sachs played significant roles in contributing to both and was publicly blamed to be fraudulent. One of the main examples of Goldman Sachs involvement in the subprime mortgage crisis was their formation of various Collateralized Debt Obligations (CDO’s) which demonstrated conflicts of interest, ultimately landing in Goldman’s favor rather than their clients. Starting in 2006 with the Hudson Mezzanine synthetic CDO, comprised of asset backed securities of Goldman’s inventory and single name CDS contracts on subprime Residential Mortgage Backed Securities (RMBS) and CDO securities Goldman wanted to short (390). With Goldman taking the short position, it allowed for them to profit from any losses that this CDO would incur. Their fault with their plan was that they did not disclose to the people buying the Hudson Mezzanine that they were taking the short position, thus creating a conflict of interest. Had they, it would have given a heads up to investors that this investment...

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