Comments for Steven Davidoff Whitewashes the Investment Banks in the NYT at http://www.cepr.net , comment 1 to 2 out of 2 comments http://www.cepr.net Wed, 19 Jun 2013 16:50:55 +0100 FeedCreator 1.7.3 http://www.cepr.net/index.php/blogs/beat-the-press/steven-davidoff-white-washes-the-investment-banks-in-the-nyt#comment-19988 While it is likely true that the bubble had peaked before many of these deals were cut, I don't think one can conclude that the deals had no causal connection to the ultimate losses. The existence of this type of deal contributed mightly to the overheating of the market, and to the sharp erosion of underwriting standards for the underlying mortgages and the securities themselves. These specific deals could be likened to the final hollowing-out of the base of the pyramid that brought the entire, inherently unstable structure down. - Mark Herlihy Mon, 05 Nov 2012 08:38:48 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/steven-davidoff-white-washes-the-investment-banks-in-the-nyt#comment-19975 ACA Management had a reputation for putting only quality mortgages in their CDOs, and this is why investors were willing to buy from them. But Goldman tricked ACA into putting crap mortgages into their CDOs. Goldman told ACA that the genius John Paulson had picked out some really good mortgages that he wanted to go long on, when actually Paulson deliberately picked out bad mortgages to go short on. So ACA put Paulson's bad mortgages into CDOs and sold them to clients who trusted ACA's track record for only selling good products. In other words, these buyers of the ACA CDOs should have done their research, but in a sense they did; they knew ACA was a trustworthy company that would only sell good products - what they didn't know is that ACA was tricked into selling crap by Goldman telling ACA that Paulson wanted to go long on housing CDOs and had picked out the best mortgages for doing so. - andrew clearfield Sun, 04 Nov 2012 07:24:03 +0100