Henry Paulson, formerly chief of Goldman Sachs, is successfully transferring collateralized debt obligations (CDOs) from the investment banks to the federal government. If he has any financial interest in the investment banking industry, I consider his actions to be unethical.Merrill Lynch has just filed suit against XL Capital Assurance, a CDO insurer for $3 billion. XL Capital’s defense will be that they were defrauded by the CDO originators, most likely including Henry Paulson.
The gloves come off when money is on the line. We are entering the discovery period. It is entirely possible that Henry Paulson will be taken down by this, or any of the upcoming lawsuits. If fraud is proven, the fallout is unpredictable.
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