By way of Barry Ritholz and Big Picture

by Zach Carter, Media Consortium blogger

The crazy conservative assault on government spending has become one of the most irrational economic policy debates in recent years.

More than two years after the collapse of Bear Stearns, the House and Senate finally ironed out their differences on Wall Street reform in the wee, small hours of Friday morning. The bill now goes back to both the House and Senate for final approval, but it’s fate in the Senate is uncertain following the defection of Tea Party Sen. Scott Brown (R-MA).

Wall Street Banks Repackaged Same Risky Bonds into Numerous Securities, Spreading the Pain Across Multiple CDOs

Former Goldman Sachs trader Richard Perry made a major investment in ACA, the company wrapped up in the Goldman-Paulson CDO fraud, at the same time he was betting heavily against subprime-related securities.

Last night, Senate Republicans proved beyond any doubt that when it comes to the economy, they stand with Wall Street and against everybody else. Joined by lone Democrat Sen. Ben Nelson (D-NE), Republicans successfully filibustered the procedural technicality of opening debate on Wall Street reform. It’s an unmistakable ploy to kill the bill and collect campaign cash from bigwig bankers. The coming weeks won’t be pretty.

by Zach Carter, Media Consortium blogger

Last week, the Securities and Exchange Commission filed fraud charges against Goldman Sachs and underscored what most Americans have believed for some time: Wall Street has rigged the economy in its own favor, and will stop at nothing—not even outright theft—to boost its profits. What’s worse, Goldman’s scam could have been completely prevented by better regulations and law enforcement.

How does your Obligation to make your Mortgage Payments, turn into some unseen Investor’s “Income Stream”?

Easy — thanks to Derivatives and CDO’s (Collateralized Debt Obligation).

For the mere Price of Admission, those unseen Investor’s get to divvy up your Mortgage Payments, among themselves — long as they “promise to pay off” that Debt, WHEN, for whatever reason, you are no longer able to make those Obligatory Payments …

Piece of Cake!

Geesh … WHAT could ever go wrong with this picture?

These things should have never existed. It is nearly impossible for fair and full disclosure to exist with securities of this sort, as nobody in their right mind is going to buy an instrument which comes into existence only because the person on the other side of the transaction believes the reference securities are going to zero!

The Securities & Exchange Commission charged Goldman Sachs Group Inc. and one of its vice presidents for defrauding investors by misstating and omitting key facts about a financial product tied to subprime mortgages.

The SEC said Goldman Sachs structured and marketed a synthetic collateralized-debt obligation, or CDO, that hinged on the performance of subprime residential mortgage-backed securities.

The CDO was structured and marketed by Goldman in early 2007 when the U.S. housing market and related securities were beginning to show signs of distress, the SEC complaint said.