Senators damn financial sector 'snake pit'
Thursday 14 April 2011 - by Will Henley
A new bipartisan report by US senators has laid bare the lax regulation, investment bank profiteering, and inflated credit ratings they say were at the heart of the financial crisis.
Among its nineteen recommendations, the 635-page final report calls for "strong implementation" of new restrictions on proprietary trading and conflicts of interest.
It demands the Securities and Exchange Commission rank credit rating agencies according to accuracy and calls for measures to strengthen capital, liquidity and loss reserves.
The document, co-authored by Republican senator Tom Coburn, claims that investment banks reviewed by the committee flooded the market with high-risk mortgage backed assets.
The report highlights documents, reviewed by the committee, which it says show that Goldman Sachs in particular profited from net short positions in mortgage related securities.
It says the evidence details how the bank recommended four CDOs to clients "without fully disclosing key information about those products, Goldman's own market views, or its adverse economic interests."
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