John Paulson has sent a letter to investors in his hedge fund regarding the brewing Goldman Sachs (GS) CDO scandal.
FT got the letter, and it basically goes like this: All we wanted to do was short crappy mortgage borrowers.
We believed that the two-year adjustable rate mortgages made to lower income borrowers with poor credit history, little or no documentation, no down payment and rates that would shortly reset at usurious interest rates set the stage for significant delinquencies and foreclosures, thus eroding the value of these securities.”
In other words, he didn’t have any special inside information, he wasn’t trying to fool anyone, he was just looking to have access to securities that would expose him directly to these folks. Simple as that.
Meanwhile, according to WSJ, Paulson said on a conference call yesterday that no investor in his fund had yet expressed interest in pulling money out… though the deadline to do so is June 30.
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