The commission pressed Blankfein on the sale of mortgage-backed securities as well as Goldman pushing the rating agencies for the highest ratings on sub-prime mortgage portfolios and then shorting them.
The territory does not have a looming sub-prime mortgage problem, and local lenders are well capitalised.
One reason is that the country's banks were relatively unexposed to the US sub-prime mortgage market.
Three years ago, the sub-prime mortgage crisis was about to burst into a full-blown economic disaster for the United States.
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Compared to the losses taken by Citigroup, Merrill Lynch and UBS, Deutsche Bank has dodged the worst of the sub-prime mortgage crash.
The global economic downturn, the sub-prime mortgage crisis, investment bank failures, falling home prices, and tight credit pushed the United States into a recession by mid-2008.
The sub-prime mortgage crisis led to a global credit crisis, and fear (as measured by the VIX) spiked to record-high levels as the stock market collapsed.
Professor Siegel counters this assertion by noting that the 10-year look-back contains a skew in earnings data associated with the financial sector during the sub-prime mortgage crisis.
Same with the famous sub-prime mortgage backed bonds, the CDOs that packaged those bonds into dangerous slices of investment that lost probably hundreds of billions.
But when the sub-prime mortgage market turned sour, the darling of the financial markets became the Black Hole equation, sucking money out of the universe in an unending stream.
Our correspondent says the main example is banking giant UBS, which wrote off billions in the wake of the 2007 sub-prime mortgage crisis, and then had to be bailed out by the Swiss government.
However, Schwab said that because the U.S. sub-prime mortgage crisis that heralded the recent economic downturn, was one of a slew of factors driving market turmoil, the World Economic Forum was ideally placed to push discussion forward.
How is it that the first substantive legal action attempting to assign accountability for the massive destruction of wealth caused by the sub-prime mortgage meltdown was taken not by the investors who lost money, but by the government?
But while many major international banks have seen large writedowns in the wake of rising defaults among the sub-prime mortgage market, the majority of China's US mortgage-backed securities were underwritten by US government agencies such as Fannie Mae.
The U.S. is still reeling from the manipulative build-up of the housing bubble, the sub-prime mortgage mess, the resulting real estate crash, and the financial crisis of 2008 that required a multi-trillion dollar bailout of banks and brokerage firms.
It is roughly five years since the US housing market bubble started to deflate, helping to tip the economy into recession and exposing the extent of the sub-prime mortgage scandal in which many people took out loans that they had little prospect of repaying.
And sure enough, the greed got seriously out of hand and then imploded, in fact twice, once with the bursting of the stock market bubble of 2000, and then even more seriously with the real estate and sub-prime mortgage bubble and resulting financial meltdown of 2008-2009.
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So they went into these really risky forms of insurance, and now as those sub-prime mortgage bonds have been down-graded and started to blow up, the bond insurers are starting to blow up, too, and the real significance is: What does it mean not just for municipalities all over the country but for the entire market?
Most people know that the meteoric rise of home prices between 2001 and 2006 had to do with sub-prime loans and mortgage-backed securities.
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Covering private mortgage brokers and other companies Over 50% of sub-prime mortgages issued as recently as 2005 involved private mortgage institutions and similar entities not currently covered under federal bank fraud criminal statutes.
According to Fannie Mae, the government-sponsored mortgage-lending agency, up to half the people who take out sub-prime loans could qualify for a prime loan, which charges as much as four percentage points less interest, a huge saving over the 30-year life of a mortgage.
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The FSA said the firm's advisers recommended unsuitable mortgage contracts to customers, such as sub-prime deals when mainstream mortgages were available.
What was worse was that all the big investors and bankers on Wall Street were investing in these sub-prime loans, so they would pour huge amounts of money into the mortgage industry -- nobody was really seeing whether these mortgages were ones that people were going to have the salary to sustain.
While sub-prime has morphed into a naughty word, a near clone has stealthily infiltrated the mortgage markets, choking the breath out of many unfortunates ensnared by its enervating tentacles.
"That is about 2% of the mortgage market and they would have been taken mainly by buy-to-let borrowers and sub-prime borrowers, " he said.
Mortgage-backed securities were used in some cases to mask the risk of default inherent within sub-prime loans, and contributed to the real estate crash and recession.
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