From Bloomberg.com:
The Hudson Mezzanine 2006-1 CDO contained credit default swaps that referenced $2 billion in subprime, BBB-rated residential mortgage-backed securities, according to the documents released by Levin’s committee. While Goldman Sachs selected the assets in the deal, the firm was also the only investor buying credit protection on the entire transaction, the documents show.
Goldman Sachs created and sold the Hudson CDO in late 2006, near the time documents released by Levin show senior executives wanted to reduce the firm’s exposure to subprime mortgages.
“The CDO imploded within two years. Your clients lost; Goldman profited,” Levin said in an April 27 hearing during which he questioned Goldman Sachs Chief Executive Officer Lloyd Blankfein about the Hudson deal and other CDOs. “To go out and sell these securities to people and then bet against those same securities, it seems to me, is a fundamental conflict of interest and is — raises a real ethical issue.”
Blankfein responded that “we are one of the largest client franchises in market-making in these kinds of activities we’re talking about” and that “they know our activities, and they understand what market-making is.”
While Goldman Sachs was short on the Hudson Mezzanine CDO, meaning it stood to gain from a collapse because of the credit protection it had purchased, a marketing document for the deal released by Levin’s committee states that “Goldman Sachs has aligned incentives with the Hudson program.”
In April I told a reporter from Crain’s NY that Goldman’s overvaluation is totally overlooked by the market and the trend followers (see side bar for the full article), and guess what happened just a few days later… Yeah, reality caught up with them!
Earlier this month, Mr. Middleton took a break from blogging to tend to his yacht. Cruising the Hudson River, as the headquarters of Wall Street’s big
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Crain’s New York
“His work is so detailed, so accurate, it’s among the best in the world,” says Eric Sprott, CEO of Sprott Asset Management, a Toronto firm that manages about $5 billion and subscribes to Mr. Middleton’s research
For more of my opinion as expressed through the mainstream media, click here.
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banks sparkled brightly, he warned of dark times. He pointed at Goldman Sachs’ huge new tower and proclaimed the bank “overvalued.” Bank of America Merrill Lynch is worse: “They bought Countrywide and some of the biggest trash out there.” He hasn’t shorted banks’ stocks lately, but plans “to go after them again” in the near future. Mr. Middleton likens himself to the character in the movie The Sixth Sense, who sees things no one else can. “I see dead countries, companies, municipalities,” he says. “They are dead and flying high in pricing.”
I can actually extend the Bloomberg article above for quite a while
When the Patina Fades… The Rise and Fall of Goldman Sachs??? Tuesday, 16 March 2010
I have warned my readers about following myths and legends versus reality and facts several times in the past, particularly as it applies to Goldman Sachs and what I have coined “Name Brand Investing”. Very recent developments from Senator Kaufman of Delaware will be putting the spit-shined patina of Wall Street’s most powerful bank to the test. Here is a link to the speech that the esteemed Senator from Delaware (yes, the most corporate friendly state in this country). A few excerpts to liven up your morning…
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CRE 2010 Overview 2009-12-15 02:39:04 2.72 Mb.
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