How Fast Will the Fraud Case Against Goldman Sachs Disappear?
While the news seemed horrible today with the SEC announcing fraud charges against Goldman Sachs (GS), the news is already turning very questionable for the SEC. Its difficult to fathom how the SEC will be able to isolate one transaction from GS and get that to stick. All of the parties in this deal were very sophisticated and knowledgable. No indication exists that they were intentionally misled. Just about everybody thought the housing market would never decline and hence irrational investments were made. If anything, the rating agencies and regulators remain as the main culprits for the blowup of the markets not GS. After the bell, news has come out that not only did GS lose $90M on the questioned deal, but Deutsche Bank (DB) lost $500M. Both banks were instrumental in working with John Paulson to structure these deals that he shorted. The SEC believes the intent was to defruad the buyers in this case. According to GS they lost $90M in this transaction because they accepted residu...