Tuesday, January 05, 2010
As if selling complex, volatile investment deals weren’t bad enough, Goldman Sachs utilized off-shore accounts in the Cayman Islands to help themselves and other Wall Street institutions hide the true nature of their high-stakes schemes that contributed to the near-collapse of the financial system.
An investigation by McClatchy Newspapers found that the Cayman accounts served as “key links in a chain of exotic insurance-like bets called credit-default swaps that worsened the global economic collapse by enabling major financial institutions to take bigger and bigger risks without counting them on their balance sheets.”
Goldman began setting up off-shore deals in 2002, some of which involved investors agreeing not only to buy but also insure securities while Goldman officials bet against them because of their high risk of tanking.
Chicago financial consultant and frequent Goldman critic Janet Tavakoli said many of these deals met “every definition of a Ponzi scheme.”
-Noel Brinkerhoff
Goldman's Offshore Deals Deepened Global Financial Crisis (by Greg Gordon, McClatchy Newspapers)
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