Chairman of Senate’s Wall Street investigations committee accuses beleaguered bank on website.
The beleaguered Wall Street bank Goldman Sachs boasted that it was making tens of millions of dollars of profits daily by betting against its own clients’ investments, according to internal emails released yesterday by a US senator.
The annual report of the bank, which is currently facing fraud charges in the US, denied that it had generated enormous revenues by wagering on the US housing crisis. Yet an email apparently from chief executive Lloyd Blankfein to his colleagues says: “Of course we didn’t dodge the mortgage mess. We lost money, then we made more than we lost because of ‘shorts’ [bets that the market would get even worse].”
The damning material from the senate’s permanent subcommittee on investigations, which is reviewing the role of Wall Street banks in the financial crisis, was posted on the website of its chairman, Senator Carl Levin. It will be used in what promises to be an incendiary public hearing on Tuesday when Blankfein is scheduled to testify in front of the subcommittee.
In a statement, Goldman stood by earlier claims that it never made significant profits out of the housing market and said that the emails proved nothing.
Sunday 25 April 2010
– Blankfein E-Mail Shows Firm Profited Betting Against Mortgages (Bloomberg):
April 24 (Bloomberg) — Goldman Sachs Group Inc. Chairman and Chief Executive Officer Lloyd Blankfein told colleagues in an e-mail that the firm made money by shorting, or betting against, mortgages, according to documents obtained and released today by a U.S. Senate subcommittee.
“Of course we didn’t dodge the mortgage mess,” Blankfein, 55, wrote in an e-mail dated Nov. 18, 2007, that was among eight pages of documents released today by the Senate’s Permanent Subcommittee on Investigations. “We lost money, then made more than we lost because of shorts. Also, it’s not over, so who knows how it will turn out ultimately.”
Goldman Sachs, the most profitable securities firm in Wall Street history, has come under scrutiny for its sales of collateralized debt obligations linked to mortgages during 2007, just as the market for such instruments started to crumble. Blankfein, 55, and six current and former employees will face questioning next week about its business practices by the subcommittee, led by Michigan Democrat Carl Levin, 75.
On April 16 the Securities and Exchange Commission sued the firm for fraud, alleging that the company and an employee, Fabrice Tourre, misled investors about a CDO. Goldman Sachs has contested the allegations, arguing that the investors had all the information they needed and that the firm would never mislead investors.
Last Updated: April 24, 2010 09:37 EDT
By Christine Harper
More on Goldman Sachs “doing God’s work”:
…and remember who got the bailout money back then:
– AIG Discloses Counterparties as Obama, Cuomo Assail Bonuses:
This time the bailout money from the U.S. taxpayer went to:
Goldman Sachs led beneficiaries, with $12.9 billion, followed by SocGen, France’s No. 3 bank, with $11.9 billion, and Deutsche Bank, Germany’s biggest lender, with $11.8 billion. Barclays Plc received $8.5 billion from AIG, Merrill Lynch & Co. got $6.8 billion, Bank of America Corp. got $5.2 billion and UBS AG got $5 billion.