In contrast to the SEC’s fraud case against Goldman Sachs, I really don’t understand what Carl Levin is driving at with the Goldman Sachs emails he’s releasing. Basically they show that some units of the company felt it was likely that the housing market would collapse, took financial positions that would pay of if it did collapse, and therefore made money. What’s wrong with that?
If you’re looking for a real policy issue in this area, the problem seems to me to be that it’s unduly difficult for an ordinary person to do what Goldman did and take a short position on housing. It’s at least possible that if everyone who was skeptical about the housing market in 2005-2006 had some way to put their money where their mouth was, that the bubble wouldn’t have inflated so high.
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