How Goldman secretly bet on the U.S. housing crash
From Greg Gordon at McClatchy Newspapers: How Goldman secretly bet on the U.S. housing crash
In 2006 and 2007, Goldman Sachs Group peddled more than $40 billion in securities backed by at least 200,000 risky home mortgages, but never told the buyers it was secretly betting that a sharp drop in U.S. housing prices would send the value of those securities plummeting.
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A Goldman spokesman, Michael DuVally, said that the firm decided in December 2006 to reduce its mortgage risks and did so by selling off subprime-related securities and making myriad insurance-like bets, called credit-default swaps, to “hedge” against a housing downturn.DuVally told McClatchy that Goldman “had no obligation to disclose how it was managing its risk, nor would investors have expected us to do so … other market participants had access to the same information we did.”
