GOODHART’S LAW AND THE TOXIC SECURITIES.

GOODHART’S LAW AND THE TOXIC SECURITIES. In the period before the financial crisis, regulations rewarded banks who held securities that were rated AAA because they were considered safer than other securities. The result was that a lot of AAA securities were created. In this post in early 2009, I quoted Lloyd Blankfein, the chief executive of Goldman Sachs: ” “In January 2008, there were 12 triple A-rated companies in the world. At the same time, there were 64,000 structured finance instruments, such as collateralised debt obligations, rated triple A.”