In a NY Times Christmas Eve article, Gretchen Morgenson and Louise Story revealed huge and aggressive bets that Goldman Sachs and other trading firms were making against their own clients in the CDO market during the period leading up to the financial meltdown of 2008. In addition, the reporters pointed to Goldman's continued issuance of CDO's which were designed so poorly that many of them failed within months, creating greater profits for the firm's enormous contrary bets on the same products' demise.
These practices, along with the 'triggers' that amplified the losses in the credit default swaps market (see AIG's bankruptcy) seem to have had, at the very least, the potential to create serious contagion in the credit markets. In an editorial today, the NY Times calls for an investigation into these practices and for greater regulation of the derivatives market to prevent future abuses.
In a post here on Christmas Eve, we called for investigations based on these revelations as well. It's in all our best interests to highlight these abuses and deal with the practices they reveal before the next bubble bursts.