Counterparties

By Felix Salmon
April 17, 2010
Self-Evident

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Bond Girl on Goldman Sachs — Self-Evident

I think my BNN hit today went quite well, but they didn’t understand my distinction between cash and synthetic CDOs — BNN

Me, talking to Brian Lehrer this morning about the tax code — WNYC

I love this Jake Dobkin photo of the WTC site — Gothamist

3 comments

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I don’t know if this is weird or not, but this is from John Paulson’s Congressional Testimony

http://online.wsj.com/public/resources/d ocuments/johnpaulson.pdf

“In 2005, our firm became very concerned about weak credit underwriting standards ( NB DON ), excessive leverage among financial institutions and a fundamental mis-pricing of credit risk. To protect our investors against the risk in the financial markets, we purchased protection through credit default swaps on debt securities we thought would decline in value due to weak credit underwriting ( NB DON ). (See Exhibits 1A-1D to this statement.) As credit spreads widened and the value of these securities fell, we realized substantial gains for our investors.”

“John Paulson, founder and head of Paulson & Co. Inc., said he hopes that his firm’s donation is just the beginning: “CRL and NACA both have long histories of working to ensure that homeowners get fair treatment from mortgage lenders. We are pleased to help them provide legal services to distressed homeowners, many of whom have been victimized by predatory lenders ( NB DON ). We hope that our grant will spur additional funds for these types of efforts from public and private sources to help more homeowners avoid foreclosure.”

I’ve always assumed that Paulson agreed with me that there was clear negligence and misrepresentation going on. Indeed, that’s one of the reasons he invested as he did. He was like a heat seeking missile for dodgy investments. Hence, he should be the last person to be surprised that these picks of his were dodgy.

I guess what Goldman will argue is that they were just the middleman. But then who would ever use them again? After all, they’re not going to tell you that some people think these products are iffy. Wouldn’t you want to know that?

Posted by DonthelibertDem | Report as abusive

Bond Girl hits it on the nose. Every large fund manager–pension, mutual, whatever–should read this and ask themselves the key question Bond Girl poses: Do you really want to do business with “backstabbing sociopaths” like Goldman Sachs?

Posted by Lilguy | Report as abusive

Pretty embarrassing that our “premiere” Business News Network journalists didn’t make the distinction between cash vs synthetics, even after FS explains it to them.

Posted by rsteuart | Report as abusive