For Goldman Sachs, it really was survival of the fittest. The corporation sold mortgage investments they thought were likely to fail and then took other steps to help spread risk throughout the financial system, the Senate Permanent Subcommittee on Investigations reports. The investigation suggests that Goldman’s actions weakened the financial industry by creating risky investments and exposing them to other parties as they dropped in value. Internal Goldman documents show they created and sold intricate investments built on risky home loans, then bet against those same investments by buying insurance that paid out if those risky loans went bad. The findings will set the stage for Goldman Sachs Chief Executive Lloyd Blankfein’s testimony before the Senate subcommittee Tuesday.
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