While Goldman Sachs was packaging sub-prime mortgages into "toxic" mortgage backed securites, a couple of sharp Goldman Sachs traders were shorting them:

Credit crunch: The $4bn killing - The Independent (Dec. 2007)

Mr Dodd said he was concerned because it appeared that Goldman Sachs was "aggressively pushing sub-prime mortgages that they knew to be of concern while simultaneously shorting "mortgage derivatives".

And he has turned his fire on Hank Paulson, President George Bush's Treasury Secretary, who was head of Goldman Sachs until being persuaded to join the administration last year. Mr Paulson is in the awkward position of seeing his Goldman Sachs shares rise in value while having to organise a bail-out for American homeowners who cannot afford their mortgages.

So, Paulson had a role in helping destroy the very market he now wants taxpayers to bail out after personally profiting from its demise? Wow!

Sven's picture

Oy In the end, he said,

Oy

In the end, he said, Congress must pass some sort of relief, if only because Wall Street is expecting it.

"If we did nothing, there is a significant risk of another collapse of confidence in the financial markets."

Peter Orszag's a good egg and should be praised for telling it straight. He's not responsible for King Paulson making the Street salivate.

But oh my gawd what kind of twilight zone are we living in?


...I forgot the other gem in the story:

During questioning before the Joint Economic Committee earlier yesterday, Bernanke acknowledged concerns about the bailout's effect on the budget.

"I think those concerns are very serious," he said. "But it's really a question of alternatives."

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