by Daniel Costello

ProPublica, the new New York-based investigative non-profit, has a joint story with the Los Angeles Times this morning that is quite interesting.

According to confidential documents obtained by ProPublica, Goldman Sachs has been playing both sides of the coin with California taxpayers' money. On the one hand, it was making millions from fees selling California bonds.

At the same time, it appears to have been making lots of cash advising people on how to profit from California's deepening financial misery and helping push down the price of those bonds and increase the interest rate California pays on its debt.

Nothing illegal to all that. But it's not exactly the kind of financial advisor you want to bring home to Mom.

Here's an excerpt:

Goldman, Sachs & Co. urged some of its big clients to place investment bets against California bonds this year despite having collected millions of dollars in fees to help the state sell some of those same bonds.

The giant investment firm did not inform the office of California Treasurer Bill Lockyer that it was proposing a way for investment clients to profit from California's deepening financial misery. In Sacramento, officials said they were concerned that Goldman's strategy could raise the interest rate the state would have to pay to borrow money, thus harming taxpayers.

"It could exaggerate people's worries about our credit," said Paul Rosenstiel, head of the public finance division of the treasurer's office.