SOMETIMES THE REGULATORS KNOW BETTER THAN THE PLAYERS

(h/t Barry Ritholtz)

Goldman Sachs took until December 2006 to realize that there was a Big Shitpile but the SEC seems to have come to that conclusion nearly a year before.

SEC Didn’t Act After Spotting Wall Street Risks, Documents Show
By Jesse Westbrook

May 6 (Bloomberg) -- The U.S. Securities and Exchange Commission, criticized by lawmakers for failing to stop practices that fueled the financial crisis, raised concerns as early as 2006 about the risks of Wall Street’s appetite for packaging mortgages into bonds.

Officials in the SEC’s division of trading and markets wrote that collateralized debt obligations tied to home loans exposed banks to writedowns if the assets weren’t immediately sold, according to documents released yesterday by a federal panel investigating the crisis.

“This risk is difficult to measure and hence to manage,” said the memo dated Feb. 1, 2006.