In an extraordinary New York Times column Republican/libertarian economist, writer, actor, and lawyer Ben Stein accuses Goldman Sachs of being a willing participant in, and even plotting, the collapse of value in the collateralized mortgage obligation (CMO) market. In the last several years Goldman sold $100 billion of the instruments to investors for substantial fees while at the same time shorting CMOs for profit.
Stein points to a dubious paper written by a Goldman economist—using a "combination of theory, data, guess-work, extrapolation, and what he recalls as history"—that forecasts dire continuing fallout from the CMO collapse. Stein notes that Goldman was among the top 10 sellers of CMOs while shorting them on a "titanic" scale when current Treasury Secretary Henry Paulson was CEO. He wants an investigation into both Goldman's conduct and Paulson's fitness to serve.