The NYT reports that Goldman Sachs was selling collaterized debt obligations (CDOs) based on its own mortgage backed securities and then bought credit default swaps (CDS) that were effectively bets that these CDOs would go bad. If this report is accurate, it is a remarkable story. It's not clear whether it is more incredible that supposedly sophisticated investors would buy Goldman securities that they supposedly near that Goldman was shorting or that an insurer would sell CDSs written against a company's own securities.
The point is that Goldman obviously knows much more about the securities it has issued than the insurer. It is difficult to believe that an insurer would be willing to issue an CDS under such circumstances.
I’m writing to you today with a sense of urgency that I haven’t felt since I began my journalism career. As executive editor of The American Prospect, I’ve witnessed firsthand how independent journalism serves as a crucial bulwark against the erosion of our democratic institutions. Today, that role is more vital than ever. Can you step up today and show your support?
The winds of authoritarianism are blowing stronger. We’re seeing alarming signs of a coordinated effort to silence critical voices and undermine the very foundations that support progressive causes. As Bob Kuttner presciently wrote in our August 2024 issue, a weaponized IRS could attack the very foundations of the progressive movement. We need readers to step up and help us dig in for the long haul.
We’re falling behind in our spring fundraising campaign, and with so much at stake we can’t afford to come up short. If you value fearless, independent journalism that holds the powerful accountable and defends democracy, now is the time to step up. The American Prospect depends on reader support to stay in the fight. Pitch in today and help us close the gap. Please consider making a donation today.
–David Dayen, Executive Editor
Copyright 2025 | The American Prospect, Inc. | All Rights Reserved
