Our tale begins in April 2006, when Goldman Sachs (GS, Fortune 500) sold $494 million of securities to institutional investors seeking yields somewhat above those that were available on U.S. Treasuries or high-rated corporate bonds.
It was an especially hinky offering, because it was backed by second mortgages rather than by traditional first mortgages. A first mortgage rarely becomes completely worthless, because a house is usually worth something.
We thought this was a cautionary tale — but it’s turned into a horror story. All the tranches of this issue, GSAMP-2006 S3, that were originally rated below AAA have defaulted.
Read more from the Money CNN




Bookmark this site


