Goldman boss denies betting on housing collapse

By admin
Tuesday, April 27, 2010 11:10 EST
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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.


Watch this video on iPhone/iPad

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)

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  • http://www.ubervu.com/conversations/rawstory.com/rs/2010/0427/goldman-sachs-ceo-faces-congress/ uberVU – social comments

    Social comments and analytics for this post…

    This post was mentioned on Twitter by RawStory: Watch live: Goldman boss denies betting on housing collapse http://bit.ly/bifivW...

  • roafer

    These greedy scumbags don't like to answer question, who is surprised?

  • enorceht

    “…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….”

    “normal Americans consumers” does that translate to “the @ssholes that will pay for our gambling debts and other loses either by just taking the money or fees of any size that we can charge” or maybe it can be shortened to “not the 1%”

  • winski

    EVERY SINGLE ONE OF THESE CLOWNS HAVE SAT IN THE COMFY CHAIRS and LIED – time after time – TO CONGRESS. These clowns should be FORCED to return ALL MONIES they made between 2004 and 2009, and 2) PUT IN JAIL TODAY FOR FRAUD and LYING TO CONGRESS.

  • edwards_com

    But Libertarians don't like Regulation. Regulation ,Glass-Stiegall, would have prevented this from happening. Libertarians LOVE wall street..
    3…2….1

  • edwards_com

    You may remember Watergate. One just One refusal to answer OR two 'I don't recall' landing someone under oath in Jail for lying to congress.

  • OldAtlantic

    Sen McCaskill is doing a good job.

  • JustSayin'

    Libertarians also don't like government bailouts… in a free market these idiots would have been bankrupt and out but you bailed them out… so no Libertarians don't like regulations but they don't like bail outs either, they also don't like the Federal Reserve that enables these morons, They don't like sheep who can't see that the two party system is owned and paid for by Wall Street as is the Federal Reserve… and no they don't like wall street, they like freedom and fairness not fixing the game so your buddies get billions while the society pays for it. They also don't like the Patriot act that your Dem buddies love, oh and they don't like wars fought for oil either but dems also love that, like the ones Obama just expanded in the middle east, soon to come in Africa oh and the one on drugs right here and in SA. But you wouldn't know any of that since you are a fan boy sheep that can't see past your own nose. Beeebeeebeee that's all you got!

  • Jake

    Libertarianism, liberalism, etc.. I highly credit Ron Paul, a Libertarian icon, for saying what is true. Obama is NOT a socialist. He is a corporatist. I agree with the getting out of policing the world and wars for profit. I agree with protecting individual civil liberties, all strong with Libertarians, and I'm what you'd call a Kucinich styled Liberal. However, many libertarians are ardently anti-choice, even against it in cases of rape or incest. Intolerable. It's male-oriented liberty too often for them. But that's not the main issue here.

    We ALL agree, a giant financial company playing in that casino should be allowed to fail and be bankrupted and broken apart in a way that does the least damage to the economy. This part of the bill, which Geithner has been supportive on, is one area I agree with Tim on. I'm also against the Federal Reserve, beyond auditing, lets disband it. Congress alone should issue currency as the Constitution has said. But many Libertarians become corporate liberals when they say that regulations CAUSED the crisis, instead of being a solution.

    Let me clarify. I'm talking about the lie you've heard beaten to death by now. That the Community Redevelopment Act 'forced' lenders to make bad loans. This is a lie. 24 of the top 25 sub prime lenders DID NOT have to follow this. They did because they knew they could bundle bad loans into dishonestly AAA rated CDOs. Then after selling them and getting a big commission, they get a CDS (insurance on it, 'in case' it fails). Knowing it will fail. Knowing they'll get paid on both ends. Then when the company collapses as above, they've got millions in the bank, who cares?

    It's a giant corporate ponzi scheme. Even Fannie & Freddie, blamed for much of this, was no more than 20% of the total problem. Giants like Goldman Sachs and the most powerful bank in the world, JPM Chase, were fully involved in that other 80%. JPM Chase going as far as telling those with mortgages NOT to make payments, that would be 'rolled in' to the loan in the future. THEN forclosing on them. This was a planned and manufactured collapse done by both the Federal Reserve and those major banks.

    Being 'anti-government' like Libertarians are is fine if they recognize that it's merely a puppet for the Fed and bankers, and other corporate elite like WalMart, doing just as good of a job as the IMF at enslaving the 3rd world to make cheap crap at the expense of our jobs and keeping them down. If they get up too much, the Military Industrial Complex bombs them into the stone age once again. But before the Libertiarians get all finger-pointy at the Pentagon, remember that every evil behind its evils are privatly owned, corporate financed. Blame the real enemy. Get off your bullshit about ANY effort to unionize, to demand the government work for the people, and not the corporations.

    To demand, through regulaton, that they can't cheat or harm the public, to demand that they pay their fair share, is 'socialism'. You only empower the corporate elite, and give rise to suspicion that you are nothing more than a corporate wing, designed to raise ire against government, to keep any potential restraint of corporate excess at bay. I'm not even against corporate excess, if it's among themselves, and only they fall when it falls through. When they take the economy down with them, it does matter. Prove you're legitimate, and for the people the constitution was written for. It wasn't written for corporations to guard their damaging activities with.

    I'm not a lockstep Democrat. I only vote that way as it's the lesser of two evils. I agree they are often no better than Republicans, and I wish viable 3rd parties could fairly compete. That would require better regulation though, what you're against. Meaning, public finance of elections, and no allowing corporations to donate whatever they want (since they have more buying power than we do and you live under an F*ing rock if you think 'people can decide for themselves' and that one candidate having dozens of high tech ads vs. one having one or two low tech – less convincing ads won't affect an elections outcome). Public financing would be a kind of 'socialization', and in your likely opposition to it, you guarantee Libertarians, Greens, Constiutionalists, Reformists, and other parties will never have a seat at the two party table during election season.

  • NadePaulKuciGravMcKi

    freedom equality
    equal opportunity
    it's all a guarantee
    i thought it was for you and me

    well it's in the constitution
    and the bill of rights
    it said all men are equal

    but some are more equal?
    and some are less equal?

  • yaright

    GO CARL. RUB THEIR NOSES IN THAT SHITTY DEAL

  • yaright

    shes a smelly old bitch just like you

  • JustSayin'

    Ah nice reply, I have to admit I agree with you 90% or more. I'm actually more of a social Libertarian but I like to play the devils advocate a bit. Some examples: although I don't like the idea of government doing health care i like the idea of having co-op/non-profit style health-care rather then free market as the libertarian party wants. I do agree with you about campaign finance being socialized in a way. I also would like to point out to you that the libertarian party is not against regulation on everything, in fact setting fair competition laws is in fact regulation. I do think that the libertarians have a bit too much faith in the free market hence my support for social libertarians rather then fiscal ones. Honestly i think the answer is as you pointed it out, somewhere in between. One thing i do know is that the current system is broken and it needs to be stripped down and rebuilt from the bare bones of our countries foundation. Time to do some restoration and remodeling. ;) And as a personal note: I am not registered as a Libertarian and I've never actually voted for it, but I do find the Libertarian position as a good start to retool our democracy, pepper some greens in there with some reformists and socialists (yeah i said it) and i think we have a more solid democracy.

  • edwards_com

    NO>
    Libertarian BUSH bailed them out in SEPTEMBER.
    Happy Tea party !!!
    LOL

  • edwards_com

    Do you agree with the Constitution ??
    Like Separation of Church & State ??
    Or all Men & WOMEN are created equal ??
    RON PAUL DOESN'T
    That Neocon Bastard
    Read his books !!

  • Corporate Indu$trial Complex

    .
    GOLDMAN SACHS' VIRTUE OF SELFISHNESS, GLOBAL RECESSION, EXONERATES CAPITALISM
    .

  • edwards_com

    Yes she is !!

  • panamarick

    It's amazin ladies and gents! Yes you can tell it's an authentic Goldman sucks because it picks up bowling balls, purifies the air in your home, slices, dices and even makes fry's! It will even pick up your dry cleaning and baby sit the kids! Hiya, hiya, hiya! Step right up tall dark and stupid and place your pension here in my hot hand and I'll show you the moon!

    “Goldman Sachs making the world suck one American worker at a time.”

  • JustSayin'

    Yeah now everyone is a Libertarian… hahaha… beee beee beeeee!

  • rinsac

    Find a way to put their sorry asses in jail. Someone needs to drop a house on them.

  • loubinion99

    LOL, dont worry, GS will lube his pockets well and tomorrow he will think differerntly. Its the American way!

    Lou
    http://www.anon-vpn.se.tc

  • fred

    Toyota puts bad brakes on some of its vehicles…
    They get run through the machine and fined a huge amount.
    Goldman Sachs sells products it knows is bad…bets against it…makes a killing in cash…nearly destroys the world economy…and only has to go talk to a bunch of full-time politicians running for their next elections…
    I say treat GS just like we treat Toyota or any company that sells a faulty product: Fine them, force them to no longer sell faulty products, WATCH them and through some of their snotty asses in jail if they continue…
    By the way a kid steals a tv a ng goes to jail but a a corporate exec steals millions and nothing happens…We ought to change this now!!! Don't let pasty politicians screww this one up!!!

  • edwards_com

    YEP..
    All Republicans

  • MarxMarvelous

    You are woefully mis-informed.
    Ron Paul is the anti-neocon.

  • edwards_com

    Us BOOK READERS don't know nothin'
    LOL

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  • BUDDAH

    FOR WRECKING GLOBAL ECONOMY A GLOBAL GOLD BAR STONING OLD SCHOOL FOR THESE EMPTY SUITS!. PEACE BUDDAH.

  • bushfatigue

    I still wonder how these greedy schmucks got the ratings agencies to grade this “shit” as AAA–when is this story going to be fully told? The ratings agencies, hopefully, will be cleaned out by the investors' suits that they are surely going to face.

  • http://www.r4-ds-karte.de m3 karte

    Don't you think that they follow money.They do not like where leads them but american people deserve the truth for all their suffering….

  • http://www.themoviedownloads.net/free-movie-downloads/free-movie-downloads-your-favorite-classics/ Moviedownloads

    There is this thing called hedging where you bet against yourself just in case, to limit potential losses.

    If you buy stock, you sell calls on it so that if the stock goes down, you don't lose your shirt. Does that make you a filthy crook for “betting” that your stock would go down? No, it makes you a smart investor.

    I like how the government takes millions in contributions from the banks, forces them to lower lending standards so that everyone can own a home regardless if they can pay for it, then blames the banks when those people can't pay their mortgages. Government created and owned Fannie and Freddie own trillions in bad mortgages, but seriously, blame the banks.

  • krust50

    classy response, but what do you expect from Americans

  • uggonlinesale

    Most of the so-called “blackmail,” the special benefits, were undone in the fix-it bill that was passed immediately after the health care bill, for example the extra money for Nebraska. It was done by reconcillation so only a majority had to vote yes instead of the super-majority of 60 needed for the health care bill itself. I don't know exactly which ones were eliminated and which expanded to cover all the states but the results did not increase the cost to tax payers. But that idiot Ben Nelson from Nebraska is bought and paid for. He just joined the Repukes in voting against bringing the bill regulating the thugs on Wall Street. I can't believe the Americans are going to return the Congress to Republicans, the people who brought you the near depression and bank bailout of 2008.
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    Most of the so-called “blackmail,” the special benefits, were undone in the fix-it bill that was passed immediately after the health care bill, for example the extra money for Nebraska. It was done by reconcillation so only a majority had to vote yes instead of the super-majority of 60 needed for the health care bill itself. I don't know exactly which ones were eliminated and which expanded to cover all the states but the results did not increase the cost to tax payers. But that idiot Ben Nelson from Nebraska is bought and paid for. He just joined the Repukes in voting against bringing the bill regulating the thugs on Wall Street. I can't believe the Americans are going to return the Congress to Republicans, the people who brought you the near depression and bank bailout of 2008.
    http://www.christianlouboutinshoessale.org
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  • uggonlinesale

    Most of the so-called “blackmail,” the special benefits, were undone in the fix-it bill that was passed immediately after the health care bill, for example the extra money for Nebraska. It was done by reconcillation so only a majority had to vote yes instead of the super-majority of 60 needed for the health care bill itself. I don't know exactly which ones were eliminated and which expanded to cover all the states but the results did not increase the cost to tax payers. But that idiot Ben Nelson from Nebraska is bought and paid for. He just joined the Repukes in voting against bringing the bill regulating the thugs on Wall Street. I can't believe the Americans are going to return the Congress to Republicans, the people who brought you the near depression and bank bailout of 2008.
    http://www.christianlouboutinshoessale.org
    http://www.skechersshape-upsshoes.com
    http://www.uggbootsonlinesales.com
    Surely, they must be able to remember for more than a few months the debacle the Republicans created just a few month ago. Surely, they must know that fixing what took 8 years to break will take more than a couple of years, especially with the Republicans blocking every effort and thus making every attempt to fix things take 4 times as long as it should.

  • uggonlinesale

    Most of the so-called “blackmail,” the special benefits, were undone in the fix-it bill that was passed immediately after the health care bill, for example the extra money for Nebraska. It was done by reconcillation so only a majority had to vote yes instead of the super-majority of 60 needed for the health care bill itself. I don't know exactly which ones were eliminated and which expanded to cover all the states but the results did not increase the cost to tax payers. But that idiot Ben Nelson from Nebraska is bought and paid for. He just joined the Repukes in voting against bringing the bill regulating the thugs on Wall Street. I can't believe the Americans are going to return the Congress to Republicans, the people who brought you the near depression and bank bailout of 2008.
    http://www.christianlouboutinshoessale.org
    http://www.skechersshape-upsshoes.com
    http://www.uggbootsonlinesales.com
    Surely, they must be able to remember for more than a few months the debacle the Republicans created just a few month ago. Surely, they must know that fixing what took 8 years to break will take more than a couple of years, especially with the Republicans blocking every effort and thus making every attempt to fix things take 4 times as long as it should.

  • uggonlinesale

    Most of the so-called “blackmail,” the special benefits, were undone in the fix-it bill that was passed immediately after the health care bill, for example the extra money for Nebraska. It was done by reconcillation so only a majority had to vote yes instead of the super-majority of 60 needed for the health care bill itself. I don't know exactly which ones were eliminated and which expanded to cover all the states but the results did not increase the cost to tax payers. But that idiot Ben Nelson from Nebraska is bought and paid for. He just joined the Repukes in voting against bringing the bill regulating the thugs on Wall Street. I can't believe the Americans are going to return the Congress to Republicans, the people who brought you the near depression and bank bailout of 2008.
    http://www.christianlouboutinshoessale.org
    http://www.skechersshape-upsshoes.com
    http://www.uggbootsonlinesales.com
    Surely, they must be able to remember for more than a few months the debacle the Republicans created just a few month ago. Surely, they must know that fixing what took 8 years to break will take more than a couple of years, especially with the Republicans blocking every effort and thus making every attempt to fix things take 4 times as long as it should.

  • uggonlinesale

    Most of the so-called “blackmail,” the special benefits, were undone in the fix-it bill that was passed immediately after the health care bill, for example the extra money for Nebraska. It was done by reconcillation so only a majority had to vote yes instead of the super-majority of 60 needed for the health care bill itself. I don't know exactly which ones were eliminated and which expanded to cover all the states but the results did not increase the cost to tax payers. But that idiot Ben Nelson from Nebraska is bought and paid for. He just joined the Repukes in voting against bringing the bill regulating the thugs on Wall Street. I can't believe the Americans are going to return the Congress to Republicans, the people who brought you the near depression and bank bailout of 2008.
    http://www.christianlouboutinshoessale.org
    http://www.skechersshape-upsshoes.com
    http://www.uggbootsonlinesales.com
    Surely, they must be able to remember for more than a few months the debacle the Republicans created just a few month ago. Surely, they must know that fixing what took 8 years to break will take more than a couple of years, especially with the Republicans blocking every effort and thus making every attempt to fix things take 4 times as long as it should.

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