Comments on: Goldman’s CDO investors: fools or victims? http://blogs.reuters.com/breakingviews/2010/04/19/goldmans-cdo-investors-fools-or-victims/ Sun, 28 Apr 2013 15:49:48 +0000 hourly 1 http://wordpress.org/?v=3.4.2 By: Pantagruel http://blogs.reuters.com/breakingviews/2010/04/19/goldmans-cdo-investors-fools-or-victims/comment-page-1/#comment-2265 Pantagruel Wed, 21 Apr 2010 10:06:36 +0000 http://blogs.reuters.com/columns/?p=2907#comment-2265 Can't help but think caveat emptor. Sure, if Goldman's defence that what it did was technically legal prevails, it still does not make the act right at all. But that Goldman managed to bring IKB and ABN Amro in on this at a time when HSBC only months earlier had reported billions of dollars of losses from its exposure to fast-deteriorating sub-prime collateral, does rather beg the question: what the dickens were IKB and ABN doing? They should have been smart enough to walk away from any investment bank marketing a synthetic CDO referencing sub-prime collateral at a time when prices were beginning to fall faster than a tart's knickers. Perhaps IKB and ABN should be fined for grandiose stupidity. The again, punishment has been meted out to them already. Can’t help but think caveat emptor. Sure, if Goldman’s defence that what it did was technically legal prevails, it still does not make the act right at all. But that Goldman managed to bring IKB and ABN Amro in on this at a time when HSBC only months earlier had reported billions of dollars of losses from its exposure to fast-deteriorating sub-prime collateral, does rather beg the question: what the dickens were IKB and ABN doing? They should have been smart enough to walk away from any investment bank marketing a synthetic CDO referencing sub-prime collateral at a time when prices were beginning to fall faster than a tart’s knickers. Perhaps IKB and ABN should be fined for grandiose stupidity. The again, punishment has been meted out to them already.

]]> By: HBC http://blogs.reuters.com/breakingviews/2010/04/19/goldmans-cdo-investors-fools-or-victims/comment-page-1/#comment-2254 HBC Tue, 20 Apr 2010 03:53:49 +0000 http://blogs.reuters.com/columns/?p=2907#comment-2254 From the SEC complaint, D.24 ...an internal GS&Co memorandum to the Goldman Sachs MCC dated March 12,2007 described the marketing advantages of ACA's "brand-name" and "credibility": "We expect the strong brand-name ofACA as well as our market-leading position in synthetic CDOs of structured products to result in a successful offering." "We expect that the role of ACA as Portfolio Selection Agent will broaden the investor base for this and future ABACUS offerings." "We intend to target suitable structured product investors who have previously participated in ACA-managed cashflow CDO transactions or who have previously participated in prior ABACUS transactions.;' "We expect to leverage ACA's credibility and franchise to help distribute this Transaction." So, Goldman went actively looking for suckers, stooges or shills, meanwhile letting Paulson select kerosene-soaked tinder re-rated as asbestos, bet that it would go up in flames, and cash in when it did. Don't really have to look much further than that for animus. It's of no relevance to ponder whether IKB were fools or victims. ACA may act as though duped, main thing is they were Decoy Number One for latecomers like IKB. A sucker may indeed be born every minute, but carpetbaggers as vile as Goldman and Paulson only come around every few decades, like vampires, and must be dispatched accordingly. From the SEC complaint, D.24

…an internal GS&Co memorandum to the Goldman Sachs MCC dated
March 12,2007 described the marketing advantages of ACA’s “brand-name” and “credibility”:

“We expect the strong brand-name ofACA as well as our market-leading
position in synthetic CDOs of structured products to result in a successful
offering.”

“We expect that the role of ACA as Portfolio Selection Agent will broaden the
investor base for this and future ABACUS offerings.”

“We intend to target suitable structured product investors who have previously participated in ACA-managed cashflow CDO transactions or who have previously participated in prior ABACUS transactions.;’

“We expect to leverage ACA’s credibility and franchise to help distribute this
Transaction.”

So, Goldman went actively looking for suckers, stooges or shills, meanwhile letting Paulson select kerosene-soaked tinder re-rated as asbestos, bet that it would go up in flames, and cash in when it did. Don’t really have to look much further than that for animus.

It’s of no relevance to ponder whether IKB were fools or victims. ACA may act as though duped, main thing is they were Decoy Number One for latecomers like IKB.

A sucker may indeed be born every minute, but carpetbaggers as vile as Goldman and Paulson only come around every few decades, like vampires, and must be dispatched accordingly.

]]> By: yr2009 http://blogs.reuters.com/breakingviews/2010/04/19/goldmans-cdo-investors-fools-or-victims/comment-page-1/#comment-2247 yr2009 Mon, 19 Apr 2010 17:07:54 +0000 http://blogs.reuters.com/columns/?p=2907#comment-2247 Excellent piece that clarifies this 'over-sophisticated' matter. Excellent piece that clarifies this ‘over-sophisticated’ matter.

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