The article has a few telling quotations. From "an expert in structured finance", “When you buy protection against an event that you have a hand in causing, you are buying fire insurance on someone else’s house and then committing arson.” From a Goldman Sachs salesman, “Here we are selling this, but we think the market is going the other way.” And Morgenson writes about the myriad ways the banks modified the rules of the game to increase their profits when the C.D.O. tanked.
But, we need not worry that such a nasty process will weave its way into our financial system again. After all, Geithner has hired Lewis Sachs as a special counselor. His firm was quite active in this process.
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