In Senate hearing, Goldman denies bad business
Washington: Goldman Sachs has denied reaping vast profits from the collapse of the US housing market as its top executive and a star trader faced hostile questions in Congress over the 2008 financial meltdown.
In angry exchanges on Tuesday before a Senate investigative committee, the storied Wall Street firm was accused of fuelling a crisis that forced thousands of Americans from their homes and continues to ravage the US economy.
Democratic Senator Carl Levin, the panel`s chairman, assailed Goldman as representative of Wall Street`s "unbridled greed," drawing them into a raging political battle over financial reform.
Republicans on Tuesday thwarted Democratic efforts to start formal debate on sweeping legislation to rein in Wall Street excesses for the second time in two days.
Against this caustic backdrop, Goldman executives battled to salvage the firm`s reputation, rejecting charges -- recently filed by a US watchdog -- that they sold clients a complex financial product devised by someone who bet against it.
Levin demanded to know why Goldman had been "trying to sell" what was described as a bad deal to investors, fuming that "as we speak, lobbyists fill the halls of Congress hoping to weaken or kill reforms that would end these abuses."
Capping more than nine hours of grilling, Goldman chief executive Lloyd Blankfein vigorously denied misleading clients about products his staff described as "crap" in emails released by the committee.
But, he admitted, the products were "maybe something that should not be permitted," because of their complexity, risk and potential for damaging the firm`s reputation,
"Our clients` trust is not only important to us, it`s essential to us," he said. "If our clients believe that we don`t deserve their trust, we cannot survive," he said.
But Blankfein defended the firm`s "short" positions on the housing investments -- betting they would fail -- as necessary to offset the company`s exposure to other slumping assets in the sector.
The company, he said, "didn`t have a massive short (position) against the housing market and we certainly did not bet against our clients," he said.
Blankfein also said that, "while profitable overall," Goldman lost about 1.2 billion dollars from investments tied to the residential housing market.
Earlier, French trader Fabrice "Fabulous Fab" Tourre, who is at the center of the Securities and Exchange Commission`s case against the firm, denied allegations he willingly misled investors.
"I deny -- categorically -- the SEC`s allegation. And I will defend myself in court against this false claim," he said.
"I have been the target of unfounded attacks on my character and motives."
If Goldman executives hoped to get an easier ride from Republicans, they may have been disappointed. Former Republican presidential candidate John McCain was scathing.
"I don`t know if Goldman Sachs has done anything illegal," he said, adding that "from the reading of these emails and the information that this committee has uncovered there is no doubt their behaviour was unethical and the American people will render a judgment as well as the courts."
In the hearing, Levin pointed to Goldman e-mail messages he said refuted the firm`s claims.
In one November 2007 message from Blankfein, he says: "Of course we didn`t dodge the mortgage mess. We lost money, then made more than we lost because of shorts," which are essentially bets that the market will drop.
Other emails made clear Goldman faced unhappiness from clients over allegedly putting its fortunes before theirs.
In one message a Goldman employee expressed concerns about a "real bad feeling across European sales about some of the trades we did with clients. The damage this has done to our franchise is very significant."
More from India
More from World
More from Sports
More from Entertaiment
- Will Shiv Sena join hands with Congress to stop BJP from entering BMC?
- Why is Akhilesh Yadav encouraging dishonesty for votes?
- China 'threatened' by ISRO's record-setting achievement?
- Report: Are mobile smartphones more unhygienic than toilet seats?
- Delhi: Three-year-old twins die after falling into washing machine in Rohini
- Virender Sehwag's reply to Kargil martyr's daughter has taken the Internet by storm
- Ind vs Aus: Mohammed Azharuddin says Jayant Yadav and Ishant Sharma should be replaced in next Test
- WATCH: Kieron Pollard's epic celebration after destroying Lahore Qalandars in Dubai
- Indian doctor rescued from ISIS recounts horror, says 'they forced me to watch videos, shot me thrice'
- Pune Test: Virender Sehwag could have saved India from embarrassment, says former Aussie stars