Why Goldman Sachs sucks? Recidivism?

Goldman’s role in the sweeping global disaster that was the housing bubble is not hard to trace. Here again, the basic trick was a decline in underwriting standards, although in this case the standards weren’t in IPOs but in mortgages.

All right, I’m officially a fan of Matt Taibbi.  And it’s issues precisely like this that are going to have me investing uber-conservatively, in annuities and other instruments where I can actually see the fine print before signing*, rather than having much of anything to do with stocks.  If I hadn’t been working for a company that was blatantly letting loan applicants get away with murder while the underwriters were pretty much told “suck it up or you’re out of a job,” I’d have fallen for it, too.

*not that annuities are a panacea – they can also be full of fail.  BUT, they tend to be unromantic and thus fly under the scam-radar.

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  1. Yeah, if I were a gambling man, I’d pretty much say to short anything GS sells; they’re in it to fleece everybody and they think they’re the smartest guys around (sadly, there may be some accuracy to that), certainly at fleecing people. I can’t imagine touching annuities, given their counterparty risk, but there’s a reason my 401k is all boring bonds….

  2. drteine

     /  July 8, 2009

    Are any investments really safe? I mean that’s the whole problem isn’t it? Companies like GS and others did such a fine job ruining credibility in the market that every investment, even annuities and bonds, look very suspect.
    I’m also heavily into bonds, but it wouldn’t surprise me in the slightest if the next big scandal is companies simply reneging on their word to repay because everyone else is too. If all bonds are junk status, then it doesn’t pay to have AAA status now does it? Especially not when the rating agencies appear to have been in on some of the inflation of asset value.

  3. I suspect that this is why savings is getting more popular — if you don’t trust the system — and who could right now, when the raters were screwy, the underwriters were committing fraud, the stocks guys were smoking something, and then you get into the REAL abuses — why on earth would you ever invest?

  4. Simply put, because interest rates on bank savings are so low; there’s no possible way to save enough to retire on — having that savings grow is the only way that can happen.

  5. convivialdingo

     /  July 9, 2009

    A family member of mine worked at GS.. she was very high up in management about 15 years ago, before she quit. Needless to say, it hasn’t improved since then.

  6. Why’d she quit?

  7. convivialdingo

     /  July 9, 2009

    I’m not 100% sure, I think it was related to compensation practices.


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