Death and Taxes – In 2007, as the sub-prime mortage crisis was looming, Goldman Sachs and hedge funder manager John Paulson teamed up to bundle 3,000,000 sub-prime mortgage loans together into a collateralized debt obligation called ABACUS 2007-AC1, and then shorted mortgages to unwitting investors. John Paulson made $1 billion (Goldman took a $15 million cut) and investors lost $1 billion.
According to The New York Times, 25 such investment vehicles were created by Goldman Sachs in order to shield the firm from massive losses in mortgages. However, they turned out to be rather great investments instead of losses. (Deutsche Bank and Morgan Stanley also created these CDOs).
