It probably seemed like a good idea at the time. A number of Goldman Sachs partners have been forced to borrow more money to cover margin calls made on loans they took to invest in hedge and private equity funds.
“Several” partners have been hoisted by their own petard, so to speak, according to CNBC. Some borrowed money from Goldman itself, and, as the economy has continued to deteriorate, Goldman has made margin calls against its own partners. Of course, many of the investments they made with the borrowed money are under duress, to say the least, leaving them without the liquidity to meet the margin calls.
The loans from Goldman are backed by the partners’ stake in the Wall Street firm. If they are unable to pay up, Goldman will have to sell their shares to cover the margins.