Does Goldman's "it's perfectly normal" defense hold water?
xpostfactoid.substack.com
In a reading of Goldman's September letter of defense against the SEC investigation into the synthetic CDO it created at Paulson's behest, one question stands out: is it really true, as Goldman's claims, that investors in a synthetic CDO would accept as a matter of course that short as well as long participants might have not only an active but a formative role in shaping the portfolio? Paulson initiated the CDO, suggested the initial portfolio to the selection agent ACA, and ultimately approved every bond in the portfolio, more than half of which were in its initial selection. Is that business as usual? Goldman says yes:
Does Goldman's "it's perfectly normal" defense hold water?
Does Goldman's "it's perfectly normal…
Does Goldman's "it's perfectly normal" defense hold water?
In a reading of Goldman's September letter of defense against the SEC investigation into the synthetic CDO it created at Paulson's behest, one question stands out: is it really true, as Goldman's claims, that investors in a synthetic CDO would accept as a matter of course that short as well as long participants might have not only an active but a formative role in shaping the portfolio? Paulson initiated the CDO, suggested the initial portfolio to the selection agent ACA, and ultimately approved every bond in the portfolio, more than half of which were in its initial selection. Is that business as usual? Goldman says yes: