Saturday, December 15, 2007

REP. VITO FOSSELLA PROFITS FROM SUBPRIME DEBACLE


Saturday, December 15, 2007

Vito Fossella bought by those who profit from subprime lending victims


Recent news in the Wall Street Journal on Wall Streets involvement in the subprime mortgage crisis raises some concerns over where Rep. Fossella's loyalties lie;
The group's big bet that securities backed by risky home loans would fall in value generated nearly $4 billion of profits during the year ended Nov. 30, according to people familiar with the firm's finances. Those gains erased $1.5 billion to $2 billion of mortgage-related losses elsewhere in the firm. On Tuesday, despite a terrible November and some of the worst market conditions in decades, analysts expect Goldman to report record net annual income of more than $11 billion.


Rep. Fossella has taken $17,500 from Goldman Sachs, with $5000 of that coming in last year's election cycle alone. Rightfully so a few eyebrows are being raised then by what Goldman knew and who exactly they were serving, their clients or those at the top reaping these massive gains;


Goldman's success at wringing profits out of the subprime fiasco, however, raises questions about how the firm balances its responsibilities to its shareholders and to its clients. Goldman's mortgage department underwrote collateralized debt obligations, or CDOs, complex securities created from pools of subprime mortgages and other debt. When those securities plunged in value this year, Goldman's customers suffered major losses, as did units within Goldman itself, thanks to their CDO holdings. The question now being raised: Why did Goldman continue to peddle CDOs to customers early this year while its own traders were betting that CDO values would fall?


A spokesman for Goldman Sachs declined to comment on the issue.Goldman bet money and profited against this subprime lending craze all the while underwriting those debts. Can you have responsible government when your representative is taking money from the likes of Goldman Sachs, and not just a small contribution. Goldman's $5,000 is more than any individual is legally allowed to give ($4,800) raising the question of who Rep. Fossella represents and listens to when it comes time for him to draft and vote on legislation.
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