Monday, April 26, 2010

Soros: Tame Derivatives or Risk Yet Another Crash

Billionaire George Soros says the derivatives behind the Securities and Exchange Commissions’ case against Goldman Sachs “merely cloned existing mortgage-backed securities into imaginary units that mimicked the originals.”

"Whether or not Goldman is guilty, the transaction in question clearly had no social benefit,” Soros writes in the Financial Times. "The primary purpose of the transaction was to generate fees and commissions."

"This synthetic collateralized debt obligation did not finance the ownership of any additional homes or allocate capital more efficiently; it merely swelled the volume of mortgage-backed securities that lost value when the housing bubble burst.” (more)

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