So Goldman takes a big hit on the loans, but gets a big equity stake in the investment at a big discount. The company says it formed an “independent” board with outside investors, but it should never be in this position in the first place (These kinds of conflicts are more prevalent than you might expect: Wall Street firms have done both sides of deals, and commercial real-estate firms sometimes represent buyer and seller or tenant and landlord).

Good for the Journal for pointing this out.

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu.