Goldman case raises questions about purpose of synthetic CDOs:

04/21/2010 | New York Times (tiered subscription model), The

The Securities and Exchange Commission's civil fraud lawsuit against Goldman Sachs raises a number of questions, particularly regarding the reason regulated banks are allowed to develop synthetic collateralized debt obligations, according to The New York Times. "With a synthetic CDO, it's a pure bet," said Erik F. Gerding, a law professor at the University of New Mexico. "It is hard to see what the social value is -- it's hard to see why you'd want to encourage these bets."

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