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RBS bought subprime mortgage backed securities - the same ones that were (mostly) created by Goldman[1].

RBS (along with most buyers) didn't realize that the AAA-rated securities they bought were actually subprime-backed (because of completely stupid rules by the ratings agencies, which Goldman exploited)

When people suddenly discovered what a disaster these were, RBS wrote down £5.9bn, and was forced to seek additional capital[2].

RBS was responsible for heir own fate of course. But Goldman sure made money out of it.

[1] http://www.telegraph.co.uk/finance/recession/5025115/RBS-tra...

[2] http://news.bbc.co.uk/2/hi/business/7096845.stm




Goldman did not invent CDOs, and they did not create the CDOs RBS purchased. (Also, what actually doomed RBS was overpaying for ABN Amro, but that's neither here nor there.)

> But Goldman sure made money out of it.

How? Exactly?


The sold the securities and shorted them at the same time.




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