Comments on: The CDO blame game http://www.hedgeworld.com/blog/?p=900 A look behind the hedge fund curtain Thu, 23 May 2013 17:36:11 +0000 http://wordpress.org/?v=2.6 By: Kent http://www.hedgeworld.com/blog/?p=900#comment-4341 Kent Tue, 27 Apr 2010 12:28:05 +0000 http://www.hedgeworld.com/blog/?p=900#comment-4341 Tom is exactly right. Everyone took a hit on their investments in 2008 except Goldman whose AIG counterparty risk was assumed by the US taxpayer. So Goldman got paid in full on a failed company that could not pay. Totally corrupted risk reward concept. Tom is exactly right. Everyone took a hit on their investments in 2008 except Goldman whose AIG counterparty risk was assumed by the US taxpayer. So Goldman got paid in full on a failed company that could not pay. Totally corrupted risk reward concept.

]]> By: Tom http://www.hedgeworld.com/blog/?p=900#comment-4303 Tom Fri, 23 Apr 2010 14:22:59 +0000 http://www.hedgeworld.com/blog/?p=900#comment-4303 The issue isn't whether these buyers bought securities they didn't understand. The issue is that Goldman did not disclose that a short seller (Paulson) had a role in selecting the contents of the portfolio. That single fact would have changed the minds of some investors. Paulson had no obligation to report that fact. The bigger issue to me is that GS, and others, were loading up on leverage in the CDS market. Those leveraged bets should have bankrupted AIG, and with it, their ability to pay on those CDS. Instead, the American tax payer bankrolled AIG so GS could get paid 100 cents on the dollar. GS, and the others, should have taken those CDS bets in the shorts, like any ordinary investor whose money is always at risk. The issue isn’t whether these buyers bought securities they didn’t understand. The issue is that Goldman did not disclose that a short seller (Paulson) had a role in selecting the contents of the portfolio. That single fact would have changed the minds of some investors. Paulson had no obligation to report that fact.

The bigger issue to me is that GS, and others, were loading up on leverage in the CDS market. Those leveraged bets should have bankrupted AIG, and with it, their ability to pay on those CDS. Instead, the American tax payer bankrolled AIG so GS could get paid 100 cents on the dollar.

GS, and the others, should have taken those CDS bets in the shorts, like any ordinary investor whose money is always at risk.

]]> By: TPerkins http://www.hedgeworld.com/blog/?p=900#comment-4302 TPerkins Fri, 23 Apr 2010 14:11:34 +0000 http://www.hedgeworld.com/blog/?p=900#comment-4302 Some of the investors also may not have access or knowledge of the entire chain of entities and business processes required to put these instruments to market,,,there is a fiduciary responsibility of those with licenses and in the position to put these complex investments to market. Or is there no fiduciary responsibility, or ethics... Some of the investors also may not have access or knowledge of the entire chain of entities and business processes required to put these instruments to market,,,there is a fiduciary responsibility of those with licenses and in the position to put these complex investments to market.
Or is there no fiduciary responsibility, or ethics…

]]> By: Chris Clair http://www.hedgeworld.com/blog/?p=900#comment-4279 Chris Clair Thu, 22 Apr 2010 14:28:00 +0000 http://www.hedgeworld.com/blog/?p=900#comment-4279 True, Paulson didn't market them, but the firm was responsible for helping put them togehter. So I should have made that distinction. True, Paulson didn’t market them, but the firm was responsible for helping put them togehter. So I should have made that distinction.

]]> By: saunderscc http://www.hedgeworld.com/blog/?p=900#comment-4278 saunderscc Thu, 22 Apr 2010 14:22:54 +0000 http://www.hedgeworld.com/blog/?p=900#comment-4278 Ummm, Paulson didn't market "those securities." Why the media and blogosphere continues to miss this point is beyond me. Remarkably, this is the one point the SEC seems to have gotten right in the GS case. Ummm, Paulson didn’t market “those securities.” Why the media and blogosphere continues to miss this point is beyond me. Remarkably, this is the one point the SEC seems to have gotten right in the GS case.

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