By Jesse Eisinger
Goldman Sachs appears to be trying to clear its name.
The compelling Permanent Subcommittee on Investigations report on the financial crisis is wrong, the bank says. Goldman Sachs didn’t have a Big Short against the housing market.
But the size of Goldman’s short is irrelevant.
No one disputes that, by 2007, the firm had pivoted to reduce its exposure from mortgages and mortgage securities and had begun shorting the market on some scale. There’s nothing wrong with that. Don’t we want banks to reduce their risk when they see trouble ahead, as Goldman did in the mortgage markets?
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