Here's why Wall Street wasn't too worried about those toxic loans:
34 percent of the loans in the 2007 deal were in California, and 9 percent were in Florida, markets where home prices were rising so fast that all the players shrugged off the risk that borrowers might default. If a loan soured, they thought, they could seize and easily resell the house without a loss.
When that belief was shown to be a fantasy, Goldman Sachs found someone else to hold the bag.
The lender's demise, however, didn't stop Goldman, which unloaded a $1.7 billion pool of bonds tied to New Century loans in February 2007. In May, weeks after New Century's bankruptcy filing, Goldman started selling securities backed by New Century mortgages in a secret deal based in the Cayman Islands, a tax haven for U.S. companies.
They just didn't mention to their buyers that what they were selling was garbage.
And in 2009, it's interesting how they continue to rake up such huge profits. Obviously the fraud committed on their watch isn't something for which they have to account.