April 19, 2010
Defending Goldman
Posted by David Zaring

Eric's got some great posts up, and you can find much elsewhere on the Goldman prosecution, including from Larry.  I'll interrupt the very interesting masters forum to do what seems to be the unconventional: defend Goldman.  Sophisticated investors comprised every party to the transaction, for one thing.  The fraud seems to be the failure to disclose that John Paulson picked the assets for the investment vehicle - but someone had to, and anyone purchasing the assets knew someone was betting against them.  When this CDO was structured, moreover, John Paulson was a middling hedge fund manager, not the Wall Street titan of today.  For that reason and many, many others, the idea that dropping his name in the fine print would have changed a single investment decision strikes me as laughable.  I'm generally skeptical of the personification of financial crises, and I haven't followed this suit too closely, but this seems like making fraud allegations about Wall Street business as usual.  I could be persuaded to change my mind, and I may be missing something (securities enforcement isn't a specialty), but I'm not yet convinced.

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ยป Goldman Sachs from ProfessorBainbridge.com ...
"I've been pondering the SEC complaint against Goldman Sachs. As the SEC litigation release explains, ..." [more] (Tracked on April 19, 2010 @ 18:42)
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