In new piece published by Forbes, "East of Eden: Mitt Romney's 2011 Returns," leading tax leading tax analyst Lee Sheppard writes: "one plausible theory of what he might be hiding for the years 2007, 2008 and 2009 is a winning bet against the housing market with his friend and fundraiser John Paulson, chief of the hedge fund Paulson & Co.
"[For the uninitiated, Paulson made $15 billion shorting the mortgage market. To make his short bets, he persuaded Goldman Sachs and Deutsche Bank to design collateralized debt obligations (CDOs) packed with dodgy subprime mortgages and derivatives based on them. One Goldman deal, Abacus 07-AC1, which was the subject of an SEC case, was a synthetic CDO that held credit default swaps on mortgage-backed securities that were certain to go bad. The case was quietly settled.]"