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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.
Goldman’s sales and its clandestine wagers, completed at the brink of the housing market meltdown, enabled the nation’s premier investment bank to pass most of its potential losses to others before a flood of mortgage defaults staggered the U.S. and global economies.
Only later did investors discover that what Goldman had promoted as triple-A rated investments were closer to junk.
Now, pension funds, insurance companies, labor unions and foreign financial institutions that bought those dicey mortgage securities are facing large losses, and a five-month McClatchy investigation has found that Goldman’s failure to disclose that it made secret, exotic bets on an imminent housing crash may have violated securities laws.
More from Ken Silverstein:
Perspective — October 23, 2013, 8:00 am
How pro-oil Louisiana politicians have shaped American environmental policy
Postcard — October 16, 2013, 8:00 am
A trip to one of the properties at issue in Louisiana’s oil-pollution lawsuits
I recently spent a semester teaching writing at an elite liberal-arts college. At strategic points around the campus, in shades of yellow and green, banners displayed the following pair of texts. The first was attributed to the college’s founder, which dates it to the 1920s. The second was extracted from the latest version of the institution’s mission statement:
The paramount obligation of a college is to develop in its students the ability to think clearly and independently, and the ability to live confidently, courageously, and hopefully.
Let us take a moment to compare these texts. The first thing to observe about the older one is that it is a sentence. It expresses an idea by placing concepts in relation to one another within the kind of structure that we call a syntax. It is, moreover, highly wrought: a parallel structure underscored by repetition, five adverbs balanced two against three.
Percentage of Britons who cannot name the city that provides the setting for the musical Chicago:
An Australian entrepreneur was selling oysters raised in tanks laced with Viagra.
A naked man believed to be under the influence of LSD rammed his pickup truck into two police cars.
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“Shelby is waiting for something. He himself does not know what it is. When it comes he will either go back into the world from which he came, or sink out of sight in the morass of alcoholism or despair that has engulfed other vagrants.”