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| Version 6 | Version 7 |
|---|---|
| Goldman Sachs comes under fire | Goldman Sachs comes under fire |
| (about 1 hour later) | |
| The chairman of an inquiry into the causes of America's financial meltdown has attacked the role of Goldman Sachs. | The chairman of an inquiry into the causes of America's financial meltdown has attacked the role of Goldman Sachs. |
| Senator Carl Levin spoke of the reckless greed that infected Wall Street's financial community. | Senator Carl Levin spoke of the reckless greed that infected Wall Street's financial community. |
| In his opening address to the hearing in Washington, Mr Levin said Goldman executives had caused widespread harm to their fellow citizens. | In his opening address to the hearing in Washington, Mr Levin said Goldman executives had caused widespread harm to their fellow citizens. |
| Several Goldman executives are giving evidence at the hearing, and all have denied they acted improperly. | Several Goldman executives are giving evidence at the hearing, and all have denied they acted improperly. |
| The "masters of the universe" would be wise to curb their arrogance and not vent their frustration by making wisecracks. Mark Mardell, BBC North America editor Read Mark's blog in full | The "masters of the universe" would be wise to curb their arrogance and not vent their frustration by making wisecracks. Mark Mardell, BBC North America editor Read Mark's blog in full |
| Mr Levin, chairman of the Senate Permanent Subcommittee on Investigations, said that Goldman had proclaimed a responsibility to its clients, "yet the evidence shows that Goldman repeatedly put its own interests and profits ahead of the interests of its clients and our communities". | Mr Levin, chairman of the Senate Permanent Subcommittee on Investigations, said that Goldman had proclaimed a responsibility to its clients, "yet the evidence shows that Goldman repeatedly put its own interests and profits ahead of the interests of its clients and our communities". |
| The firm packaged complex mortgage-backed securities and then sold them to investors knowing that the housing market was about to collapse, it is alleged. | |
| Furthermore, it is claimed, Goldman bet that the value of these securities would fall. | |
| Mr Levin said that Goldman's "misuse of exotic and complex financial structures helped spread toxic mortgages throughout the financial system". | |
| "And when the system finally collapsed under the weight of those toxic mortgages, Goldman profited from the collapse," Senator Levin said. | "And when the system finally collapsed under the weight of those toxic mortgages, Goldman profited from the collapse," Senator Levin said. |
| Goldman executives at the hearing include Fabrice Tourre, who faces charges of fraud, Daniel Sparks, Joshua Birnbaum, and Michael Swenson. | Goldman executives at the hearing include Fabrice Tourre, who faces charges of fraud, Daniel Sparks, Joshua Birnbaum, and Michael Swenson. |
| Lloyd Blankfein, the firm's chief executive, is due to appear later in the day. | Lloyd Blankfein, the firm's chief executive, is due to appear later in the day. |
| Time wasting | Time wasting |
| FABRICE TOURRE 31-year-old executive director of Goldman Sachs InternationalCharged with securities fraud for making misleading statements to investorsResponsible for Abacus 2007-ACI, the complex financial product at the centre of the financial regulator's investigation. Denies chargesReferred to himself as "the fabulous Fab" in an e-mail Goldman: 'Fab' Tourre's emails class="" href="/2/hi/business/8646728.stm">Have Goldman charges opened floodgates? | |
| In the opening session, Mr Levin and other committee members challenged the Goldman executives about their duty to clients and the amount of money the firm made in the housing market. | In the opening session, Mr Levin and other committee members challenged the Goldman executives about their duty to clients and the amount of money the firm made in the housing market. |
| Clearly frustrated at some of their answers, Mr Levin accused the executives of evading the questions and of having "a strategy" to waste time. | Clearly frustrated at some of their answers, Mr Levin accused the executives of evading the questions and of having "a strategy" to waste time. |
| "We're going to stay here as long as it takes to get this information," Mr Levin warned the executives. | "We're going to stay here as long as it takes to get this information," Mr Levin warned the executives. |
| In a series of tense exchanges, Mr Levin quizzed Mr Sparks, former head of mortgages, about whether he felt obliged to tell clients when he was betting against investments sold by Goldman. | |
| The senator highlighted one particular investment portfolio that Mr Sparks' own bosses had described in highly derogatory terms. | |
| Mr Sparks did not respond directly, repeating that the description of the investment product used by his bosses was not his own. | |
| Tuesday's hearing is the fourth in a series that is focusing on what lay behind the financial crisis and the collapse of the housing market. | Tuesday's hearing is the fourth in a series that is focusing on what lay behind the financial crisis and the collapse of the housing market. |
| This latest hearing focuses on the role of investment banks, and specifically that played by Goldman. | This latest hearing focuses on the role of investment banks, and specifically that played by Goldman. |
| The hearing comes after Goldman, and a London-based Mr Tourre, were charged with civil fraud by the Securities and Exchange Commission. | The hearing comes after Goldman, and a London-based Mr Tourre, were charged with civil fraud by the Securities and Exchange Commission. |
| They are alleged to have misled clients about a conflict of interest and thereby profited from the sub-prime housing collapse. | They are alleged to have misled clients about a conflict of interest and thereby profited from the sub-prime housing collapse. |
| 'False claim' | 'False claim' |
| LLOYD BLANKFEIN Chairman and chief executive of world's biggest investment bank, Goldman SachsEarned more than $70m in 2007 - a record for a Wall Street boss. Took home less than $1m in 2009Told magazine interviewer last year "I'm doing God's work". Profile: Lloyd Blankfein Goldman's 150-year reputation on the line | |
| In a statement released ahead of the hearing and later read to the senators, Mr Tourre denied wrong-doing and said he would clear his name in court. | In a statement released ahead of the hearing and later read to the senators, Mr Tourre denied wrong-doing and said he would clear his name in court. |
| Mr Tourre, the only individual to be charged, said: "I deny - categorically - the SEC's allegations. And I will defend myself in court against this false claim." | Mr Tourre, the only individual to be charged, said: "I deny - categorically - the SEC's allegations. And I will defend myself in court against this false claim." |
| Mr Blankfein also denies that his investment bank bet against its own clients in the US property market. | Mr Blankfein also denies that his investment bank bet against its own clients in the US property market. |
| The under-fire banker will argue that Goldman was simply "managing [its] risk" in betting on market falls. | The under-fire banker will argue that Goldman was simply "managing [its] risk" in betting on market falls. |
| He will also say that the bank lost $1.2bn (£779m) as a result of the collapse in house prices in 2008. | He will also say that the bank lost $1.2bn (£779m) as a result of the collapse in house prices in 2008. |
| Charge disputed | Charge disputed |
| In a text of his prepared testimony, Mr Blankfein said the bank "strongly disagreed" with the SEC's complaint, calling the episode "one of the worst days in my professional life". | In a text of his prepared testimony, Mr Blankfein said the bank "strongly disagreed" with the SEC's complaint, calling the episode "one of the worst days in my professional life". |
| "We have been a client-centred firm for 140 years and if our clients believe that we don't deserve their trust, we cannot survive." | "We have been a client-centred firm for 140 years and if our clients believe that we don't deserve their trust, we cannot survive." |
| He added that the accusation that the bank made money from bets on market falls ("short" positions) was simply not true. | He added that the accusation that the bank made money from bets on market falls ("short" positions) was simply not true. |
| "We didn't have a massive short against the housing market and we certainly did not bet against our clients," he said. | "We didn't have a massive short against the housing market and we certainly did not bet against our clients," he said. |
| "Rather, we believe that we managed our risk as our shareholders and our regulators would expect." | "Rather, we believe that we managed our risk as our shareholders and our regulators would expect." |