Reply #15: While I appreciate a rational, technical discussion of these financial issue for a change... [View All]

[HamdenRice]

which you are providing with your post, I think there is a lot to what the OP is saying.

The problem is that G-S was underwriting mortgage backed securities (mbs) at the time.

As the underwriter, G-S helped draft the prospectus and registration statement for these securities. The Securities Act requires all the parties to a prospectus, not make a material misstatements of fact or even fail to disclose a material fact that relates to the value of the securities.

If there were analysts at G-S who had discovered serious system risk in the mortgage and mbs markets, and the G-S executives involved in underwriting mbs knew this, and they did not put that in the prospectuses of securities they underwrote and sold to the public, they are probably criminally liable for securities fraud.