November 1, 2009 12:00 AM

Why did Goldman stop scrutinizing loans it bought?

Goldman Sachs Group got into the residential mortgage business in 1984, and for 17 years, it ran a staid operation that simply bought and sold loans. All that changed in 2001, when the elite investment bank leaped aggressively into the burgeoning subprime securities market that was becoming a fountain of money for its Wall Street rivals.

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