Bullish on Books Blog

Will Goldman Sachs Be the 'Enron' of Financial Crisis?


Three authors who have written major books about the financial crisis gave their opinion on the Goldman Sachs case.

The Securities and Exchange Commission filed a civil fraud suit on Friday that essentially says that Goldman built the financial equivalent of a time bomb that was set up to fail and then sold it to unwitting investors.

For its part, Goldman Sachs maintains it has done nothing wrong and lost millions on the deal.

Bethany McLean, author of "The Smartest Guys in the Room," Roger Lowenstein, author of 'The End of Wall Street,' and Andrew Ross Sorkin, author of 'Too Big to Fail," appeared on CNBC Monday.

Following the Goldman Fallout

"Enron became the symbol of everything that was wrong with the California energy markets even though arguably it didn't cause the crisis. But Goldman is in danger of being the same for real estate," said Mclean.

McLean says that several people she's talked to in the collaterized debt obligation (CDO) industry told her that the idea of shorting a fund the way Goldman did, was not right and said to her 'this is not business as usual.'

The fact that the buyers of the assets didn't know someone was shorting was not right, McLean says she was told.

"The whole situation was ugly for Goldman and makes them look like a nasty hedge fund," Lowenstein added. "It doesn't look good for them. I don't think they will fail, but it's not good."

Sorkin said, "There's clearly issues about whether this was moral. Legally there is the issue of what was in the CDO for investors to know."

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