According to NY Magazne’s Kevin Roose it's a shame Occupy Wall Street is no longer the force it used to be, because the movement could have had a field day with the story of Donald Mullen. Mullen, a former Goldman Sachs mortgage executive who helped design the trades that allowed Goldman to profit from the collapse of the housing bubble, is raising money for a hedge fund that will buy up foreclosed homes and rent them out, Reuters reports.
Let's go over this a little more slowly, because it is
actually sort of crazy: In the years leading up to the financial crisis, a team
of mortgage executives and traders at Goldman Sachs predicted that the housing
market was in trouble. So they designed a massive bet against it, using a bunch
of esoteric financial instruments known as collateralized debt obligations that
would pay off in the event that housing prices fell and homeowners defaulted on
their mortgages.
That bet, now known colloquially as "the big
short," allowed Goldman and its clients (including hedge-fund managers
like John Paulson) to avoid losses and make billions of dollars when the
housing market collapsed, at the same time that people around the country lost
their homes to foreclosure. Now, the guy who led that team — the exact same guy! — is
starting a hedge fund that will make money by buying up foreclosed-upon houses
and renting them out for profit....
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