NEW YORK (TheStreet) -- On his Wednesday Stop Trading! segment on CNBC, Jim Cramer wondered whether the SEC has made the wrong call on going after Goldman Sachs (GS) - Get Report for securities fraud.
Why? Because "Goldman was clearly betting against
," Cramer said, explaining that between 2006 and 2007, many at Goldman thought that Paulson was "just dead wrong." He pointed out that during that period, many people, even professors, believed that tranches of collateralized debt obligations (CDO) were paying.
"Increasingly you have to wonder whether the SEC was sophisticated enough to recognize that Goldman was betting against Paulson," and not for him, Cramer said. The SEC has alleged that Paulson and Goldman had corroborated on the creation of housing-market-based CDOs to be sold to investors just so Paulson could bet against them.
Still, Cramer said he can see the appeal in pursuing Goldman Sachs, who he says is now "public enemy number one. They've moved off
"Who's sexier to take down, some guy who's named Cassano or some guy who's named Goldman?," Cramer asked. Joe Cassano was a founder of AIG's financial products unit, whose credit default swap products were blamed for helping to blow up the financial system at the taxpayer's agony.
Some have speculated that if the SEC case against Goldman Sachs ends up in court, the complexities of it will be too difficult for the jury to understand. But Cramer argued that all the American people care about right now is that they're on average making about $57,000 a year, while Goldman Sachs executives are making $57 million. That, Cramer said, is all the jury needs to understand.
-- Reported by Andrea Tse in New York
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