JT Note: There is nothing wrong with hedging or taking the opposite view to one's customers. There is nothing wrong with using credit derivatives to accomplish this goal. The underlying RMBSs and CDOs, however, were value-destroying and misrated. I and others said so at the time deals like this were created. GSAMP Trust 2006-3 is just one example. Tranches sold as "AAA," "super-senior," and "investment grade" did not deserve those labels at the outset, and any underwriter or securitization professional worth their salt knew it.


Responding to Goldman Sachs
TSF (also on Huffington Post) – December 25, 2009
By Janet Tavakoli




Janet Tavakoli is the president of Tavakoli Structured Finance, a Chicago-based firm that provides consulting to financial institutions and institutional investors. Ms. Tavakoli has more than 20 years of experience in senior investment banking positions, trading, structuring and marketing structured financial products. She is a former adjunct professor of derivatives at the University of Chicago's Graduate School of Business. She is the author of: Credit Derivatives & Synthetic Structures (John Wiley & Sons, 1998, 2001), Structured Finance & Collateralized Debt Obligations (John Wiley & Sons, 2008).

Janet Tavakoli's book on the global financial meltdown is Dear Mr. Buffett: What An Investor Learns 1,269 Miles From Wall Street (Wiley 2009)


Clients of Tavakoli Structured Finance have the benefit of proprietary consultation, which is not available in any other paid or public forum. Clients also commission proprietary research and analysis.

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