Goldman Sachs And The Subprime Mortgage Case

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Goldman Sachs and the Subprime Mortgage Securities Case Since 1869, the investment banking firm Goldman Sachs has been working to satisfy their customer’s financial needs. In 2008 the firm played a large role in causing the devastating market crash that negatively affected millions of families around the world. At the heart of the cause of the depression, Goldman Sachs took certain steps to make sure they profited, but unfortunately it was at the expense of the market and the public. Just before the market crash, the company blatantly acted in a manner inconsistent to their code of ethics as well as the standards governing their industry. Charges were brought forth in 2010 against Goldman and one of their employees, Fabrice Tourre. It is speculated that the reason only one employee was charged was because he was easily convicted based on the amount of evidence in his emails. The company itself was charged with securities fraud and Tourre was charged for “making materially misleading statements and omissions in connection with a synthetic collateralized debt obligation (CDO)” (Mogielnicki 80). At the epicenter of the whole debacle was the CDO named Abacus 2007-AC1. This CDO was comprised of poorly rated (BBB) bonds that were selected by John Paulson, head of Paulson & Co. investment company which is based in New York, and ACA Management LLC. The “BBB” rating means that “as the home loans defaulted, these bonds would be among the first to feel the pain,” (Wilchins 1). ACA

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