Sen. Levin accuses firm of ‘trying to sell a shitty deal’ to investors
Goldman Sachs denied reaping vast profits from the collapse of the US housing market as its top executive and a star trader faced a grilling Tuesday in Congress over the 2008 financial meltdown.
In angry exchanges before a Senate investigative committee, the storied Wall Street firm was accused of unbridled greed in a crisis that forced thousands of Americans from their homes.
Democratic Senator Carl Levin, the panel’s chairman, assailed Goldman as representative of Wall Street’s greed, linking them to a raging political fight over the most sweeping financial reforms in a generation.
Accusing Goldman of “trying to sell a shitty deal” to investors, Levin fumed that “as we speak, lobbyists fill the halls of Congress hoping to weaken or kill reforms that would end these abuses.”
Newsweek’s Michael Hirsh blogs,
Daniel Sparks, the former head of Goldman’s mortgage department, repeatedly declined to utter the simple statement that he had acted in the clients’ best interests, as did two other Goldman witnesses including Tourre (who took the opportunity to deny all the SEC charges against him). “You knew it was a s–tty deal,” Levin told Sparks, repeating again and again a word seldom heard on the record from high public officials. “How much of that s–tty deal did you sell to your clients?”
Sparks refused to say. When Collins asked him whether he felt an obligation to “act in the best interest of your clients,” Sparks couldn’t answer that directly either. “I had a duty to act in a very straightforward way and very open way with my clients,” he responded, prompting gasps of incredulity in the room.
In reporting the exchange, the conservative Drudge Report linked to a Breitbart video, using an all-caps banner: “DEM POTTY MOUTH: USE S-BOMB 11X IN PUBLIC HEARING.”
This video is from C-SPAN 3, broadcast April 27, 2010.
WASHINGTON (AFP) – Embattled Goldman Sachs boss Lloyd Blankfein will tell lawmakers it did not bet on the collapse of the housing market when he is dragged over the coals by a Senate investigation panel on Tuesday.
Blankfein will tell the Permanent Senate Subcommittee on Investigations that Goldman lost 1.2 billion dollars from housing-related investments, as he tries to salvage his firm’s reputation.
The financial giant faces fraud charges for misleading investors about mortgage-backed products and making “short” bets that the housing market would collapse as thousands of Americans were forced from their homes.
Lawmakers on Sunday released emails apparently showing that Goldman had in fact profited from the crisis.
“Of course we didn’t dodge the mortgage mess,” Blankfein told staff in a 2007 email released by the US Senate, “we lost money, then made more than we lost because of shorts.”
According to prepared testimony Blankfein will say that “during the two years of the financial crisis, while profitable overall, Goldman Sachs lost approximately 1.2 billion dollars from our activities in the residential housing market.”
He will also say that Goldman did not “consistently or significantly” bet against the housing market.
“We didn?t have a massive short against the housing market and we certainly did not bet against our clients.”
Blankfein, who guided Goldman through the financial crisis and a 10-billion-dollar government bailout, is sure to face questions about the charges brought by the Securities and Exchange Commission.
The SEC has claimed Goldman allowed a prominent hedge fund to help put together a package of subprime mortgages that were sold to clients, but which the fund was at the same time betting against.
The company has denied any wrongdoing.
Blankfein will stress Goldman was dealing with sophisticated business partners from “companies, governments, pension funds, mutual funds and other investing institutions,” not normal Americans consumers.
He will also try to stress the role of investment banks in keeping the economy ticking over.
“Many Americans are skeptical about the contribution of investment banking to our economy and understandably angry about how Wall Street contributed to the financial crisis.
“These functions are important to economic growth and job creation.”
(with AFP reports)