Will awareness of Goldman’s Abucus debacle promote ownership of physical gold?
*The Wall Street Journal, by Aaron Lucchetti & Serena Ng, April 20, 2010
”Abacus 2007-AC1, the mortgage deal at the center of Friday’s civil-fraud lawsuit against Goldman Sachs Group Inc., also boasts another dubious distinction: It was one of the worst-performing mortgage deals of the housing crisis, based on one measure of rating-firm downgrades.
Less than a year after the deal was completed, 100% of the bonds selected for Abacus had been downgraded, according to a February 2008 report by Wachovia Capital Markets, since acquired by Wells Fargo & Co.
That was a fate that only two other such deals, known as collateralized debt obligations, or CDOs, suffered around that time, out of hundreds in the Wachovia report. But other mortgage CDOs were also showing signs of distress at the time. And most soon saw their value plunge, as ratings agencies lowered their views on bonds backed by subprime mortgages.
The news about Abacus, whose assets allegedly were chosen with a help of a bearish hedge fund, once again highlights the ratings agencies’ flubs on mortgage-backed bonds that many experts say were a leading cause of the credit crisis.”
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