The blame for the 2008 market collapse has been placed on Goldman Sachs. The investment bank has been hauled over the coals in a Senate Report that illustrates how it was shorting the subprime mortgage market, making billions of dollars by telling investors one thing and encouraging them to enter certain deals and then trading in the opposite direction.
Let's cut through the financial jargon. What Goldman Sachs did, to put it simply, was bet against home loans in 2006 and 2007, while simultaneously selling mortgage securities that had packaged up these dodgy home loans, to clients who were too stupid and too greedy to realize what it was doing. In other words, Goldman Sachs was misleading clients by encouraging them to take up investments that Goldman Sachs privately regarded as dogs.
Releasing the report, Senator Carl Levin called Goldman Sachs "a financial snake pit rife with greed, conflicts of interest, and wrongdoing". He said Goldman Sachs CEO Lloyd Blankfein should face perjury charges.
Watch this space.
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