Newly released e-mails prove Goldman Sachs made a lot of money betting against the mortgage market

[babylonsister]

Goldman Sachs e-mails suggest firm profited from mortgage crisis
By Ian Swanson - 04/24/10 12:32 PM ET


A Senate panel has released e-mails from Goldman Sachs executives that suggest the investment bank profited from the mortgage crisis.

The e-mails released Saturday by the Senate Permanent Subcommittee on Investigations show Goldman Sachs Chairman and CEO Lloyd Blankfein saying the bank initially lost money on the investments but then more than made those losses back.

“Of course we didn’t dodge the mortgage mess. We lost money, then made more than we lost because of shorts,” Blankfein wrote in the e-mail, dated Nov. 18.

Blankfein and other Goldman Sachs executives are scheduled to testify next week before the investigations subcommittee, which is examining the Wall Street crisis.

Sen. Carl Levin, the investigative subcommittee’s chairman, said the e-mails show Goldman “made a lot of money by betting against the mortgage market.”

“Investment banks such as Goldman Sachs were not simply market-makers, they were self-interested promoters of risky and complicated financial schemes that helped trigger the crisis,” Levin said in a statement released Saturday.

“They bundled toxic mortgages into complex financial instruments, got the credit rating agencies to label them as AAA securities and sold them to investors, magnifying and spreading risk throughout the financial system, and all too often betting against the instruments they sold and profiting at the expense of their clients.”

Levin said Goldman’s 2009 annual report said the firm “did not generate enormous net revenues by betting against residential related products” and that the e-mails show this is not the case.

more...

http://thehill.com/blogs/on-the-money/corporate-governance/94129-goldman-sachs-e-mails-suggest-firm-profited-from-the-mortgage-crisis

[sandnsea]

1. Ya know, I've said that for a couple of years

and had all the supposed DU financial experts tell me I just didn't understand the mortgage market.

I hope people wise up and recognize that they do this with everything. There's no such thing as the "long run", there's no such thing as a market always rising, they only tell you where to put money so THEY can take it all.

Learn how to play with them, or be prepared to lose.

[gratuitous]

2. "Tell him the good part, Randolph"

"Whether our clients make money, or lose money, Goldman Sachs takes a fee on every transaction."

[babylonsister]

3. I imagine this isn't surprising to many, but proof is good. Levin

sounds like he's loaded for bear.