Wall Street’s biggest firms are considering the suitability of selling opaque financial products to governments, endowments and not-for-profit institutions after the contracts magnified credit-market losses that plunged the U.S. into a recession. “There is no distinction among very different groups of investors, and this is where things might change,” said Dino Kos, a managing director [...]

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“Questions have been raised that go to the heart of this institution’s most fundamental value: how we treat our clients.” — Lloyd C. Blankfein, Goldman Sachs’s C.E.O., at the firm’s annual meeting in May As the housing crisis mounted in early 2007, Goldman Sachs was busy selling risky, mortgage-related securities issued by its longtime client, [...]

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In June 2006, a year before the subprime mortgage market collapsed, Morgan Stanleycreated a cluster of investments doomed to fail even if default rates stayed low — then bet against its concoction. Known as the Baldwin deals, the $167 million of synthetic collateralized debt obligations had an unusual feature, according to sales documents. Rather than curtailing [...]

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Former Citigroup Inc. Chief Executive Officer Charles O. “Chuck” Prince said he wasn’t aware of the mortgage-related securities that caused the bank’s biggest losses until the financial crisis struck. Neither was Robert Rubin, the former U.S. Treasury secretary who headed the bank’s executive committee in the decade leading up to the crisis, he said at a hearing today [...]

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Subprime-mortgage securities are rising at an accelerating pace as the U.S. begins to encourage reductions to homeowners’ balances, which may lead to fewer foreclosures and a quicker end to the housing slump. A Markit ABX index of credit-default swaps tied to 20 subprime-loan bonds rated AAA when created in the first half of 2006 climbed 3.2 [...]

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Feb. 9 (Bloomberg) — Since its inception, the derivatives market has echoed the fairground hawkers’ call to “scream if you want to go faster.” Among the new derivatives, collateralized-debt obligations (CDOs) were particularly hot. To make a CDO, bankers bundle together a package of other kinds of securities, such as corporate bonds, asset-backed securities (ABSs) [...]

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The Great Bailout is mostly over for the banks. But for those troubled behemoths of the nation’s housing bust, Fannie Mae and Freddie Mac, the lifeline from Washington just keeps getting longer. Fifteen months after Fannie [FNM  1.01   -0.02  (-1.94%)   ] and Freddie [FRE  1.21  -0.02  (-1.63%)   ] were effectively nationalized, neither the Obama administration nor Congressional leaders see a quick solution to [...]

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WASHINGTON: President Barack Obama on Monday unveiled a budget projecting a record deficit this year, with billions of dollars to curb unemployment and tax hikes on the rich to tame big fiscal shortfalls. “It’s a budget that reflects the serious challenges facing the country,” Obama said at the White House after sending the mammoth spending [...]

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DAVOS, Switzerland : Global leaders and bankers will be looking for firm signs at the Davos forum this week of China’s determination to control the hot money pouring into its economy. A year after China’s Premier Wen Jiabao sternly lectured the United States and other western nations at the World Economic Forum for causing the [...]

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WASHINGTON : The lead author of a World Bank report on the global economy published Wednesday said the bank sees “signs of bubbles” in the Chinese economy, a problem he said the Chinese government acknowledges. “We can already see some signs of bubbles and signs of tensions in the Chinese economy, in particular in the [...]

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