News headline: “Goldman will pay $550 million to settle SEC charges”
“The SEC accused Goldman of creating and marketing a debt product linked to subprime mortgages without telling investors that a prominent hedge fund [Paulson & Co.] helped choose the underlying securities and was betting against them.”
From the Huffington Post: “Jack Lew: Obama’s OMB Pick Oversaw Citigroup Unit That Shorted Housing Market”
“Though Lew is a longtime public servant who’s spent nearly 30 years in various positions throughout government, it is his few years at Citiâ€”in particular the one year he spent at its then-$54 billion proprietary trading, hedge fund and private equity unitâ€”that’s likely to raise the most eyebrows in the coming weeks as Lew faces a Senate confirmation hearing.
“Especially his unit’s investments in a hedge fund [Paulson & Co.] that bet on the housing market to collapseâ€”a reality suffered by millions of American homeowners.”
So the SEC approves a $550 million settlement with Goldman Sachsâ€”an amount well below what many suspected Goldman would have to pay to make the civil fraud charges go awayâ€”shortly before President Obama’s pick to head the Office of Management and Budget faces a confirmation hearing at which he’s likely to be questioned about Citigroup’s involvement with Paulson and Goldman during his tenure there.
And they say there are no coincidences.
Actually, anyone involved in shorting the housing market during the bubble years deserves credit for being smarter than just about everyone else. Who can argue with putting smart people in important positions?