That could still be the case. But the timing is right for the SEC to leverage the public distrust of Wall Street against Goldman Sachs.
Nobody is charging Paulson & Co., with anything, but Paulson’s hedge fund was the big winner on the deal, betting against the housing bubble at just the right time. I wish some of my mutual funds had bet against the housing bubble, and made a profit instead of a loss. But some people bet against it too soon, and lost money. So betting against a bubble is no sure thing; if you bet against the bubble before it peaks, you could lose big.
There’s nothing wrong with going short on any investment. There’s nothing wrong with assembling mortgage backed securities. There’s not even anything wrong with betting against MBS’s by using Credit Default Swaps. There’s nothing wrong with a broker taking both sides of a market. But what Goldman is accused of doing wrong is allowing Paulson to structure the mortgage backed securities, on which it sold credit default swaps.
Here’s an article about Paulson and one of the players there.