SEC Rule Would Ban Banks and Hedge Funds From Betting on Investor Losses
SEC Rule Would Ban Banks and Hedge Funds From Betting on Investor Losses
By DJ Pangburn Monday, September 19, 2011
In the lead-up to the 2008 sub-prime mortgage crisis, banks like Goldman Sachs bet against their clients with collateralized debt obligations and were rewarded handsomely. A new Securities and Exchange Commission (SEC) proposal would make this illegal.
In 2007, as the sub-prime mortage crisis was looming, Goldman Sachs and hedge funder manager John Paulson teamed up to bundle 3,000,000 sub-prime mortgage loans together into a collateralized debt obligation called ABACUS 2007-AC1, and then shorted mortgages to unwitting investors. John Paulson made $1 billion (Goldman took a $15 million cut) and investors lost $1 billion.
According to The New York Times, 25 such investment vehicles were created by Goldman Sachs in order to shield the firm from massive losses in mortgages. However, they turned out to be rather great investments instead of losses. (Deutsche Bank and Morgan Stanley also created these CDOs).
At issue in the SEC complaint was whether the firms who selected the mortgages intentionally chose those most likely to fail and shine the shit for their investors.
.
Comment
"Destroying the New World Order"
THANK YOU FOR SUPPORTING THE SITE!
Latest Activity
- Top News
- Everything
"You may be consuming human tissue unknowingly in vaccines, food or drink. One of the cruellest…"
"Democrats pretend to be icons of democracy, but what kind of rule do they have in mind? When they…"
"I got some "proof" for you. An early prehistoric cave painting documented on a runestone."
All In The Family | Mike Meets Archie For The First Time | The Norman Lear Effect
"Television programs have come down a lot in quality since those days. "
In the Political Realm They've Gone One Step Too Far!
I'm Your Host here on a completely new program. We call it One Step Too Far! Join us now for some…See More
All In The Family | Mike Meets Archie For The First Time | The Norman Lear Effect
"Wow almost as brainless as entitled as the college dolts who argued with Charlie Kirk before his…"
America Copied Germany’s Jerry Can — But Missed The One Genius Detail that Made All the Difference
America Copied Germany’s WWII Jerry Can — But Missed The One Genuis Detail that Made All the DifferenceIn World War II, Allied armies were losing up to half ...
© 2026 Created by truth.
Powered by
You need to be a member of 12160 Social Network to add comments!
Join 12160 Social Network