McClatchy Expose Reveals How Goldman Sachs Sold Off Billions in Mortgage Securities After Anticipating Housing Collapse

A five-month investigation by McClatchy Newspapers reveals that Goldman Sachs made secret bets against the housing market while simultaneously selling off billions in soon-to-be worthless securities. In 2006 and 2007, the bank reportedly peddled more than $40 billion in securities backed by at least 200,000 risky home mortgages, but never told the buyers it was secretly betting that a sharp drop in US housing prices would send the value of those securities plummeting. It was only later that investors discovered that what Goldman had promoted as triple-A rated investments were closer to junk.

This double-dealing allowed Goldman to foist most of its potential losses on to other investors before a flood of mortgage defaults brought down the US and global economies. But Goldman’s failure to disclose that it made secret bets on an imminent housing crash may have violated securities laws. The investigation also reveals that Goldman Sachs used offshore tax havens to shuffle its mortgage-backed securities to institutions around the world, often in secret deals run through the Cayman Islands. For more on Goldman Sachs and its role in the financial crisis, we’re joined now from Washington, DC by Greg Gordon, the McClatchy journalist behind this multi-part investigation.

Greg Gordon, Investigative journalist with McClatchy Newspapers. He just published a multi-part investigation of Goldman Sachs and how it secretly bet against the housing market.

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