After two years of hemming and hawing in Washington about the real culprits on Wall Street, Sen. Carl Levin's Permanent Subcommittee on Investigations finally got to the heart of the matter this morning. Drawing on a voluminous collection of internal Goldman e-mails and other exhibits, Levin and the ranking acting co-chair, Sen. Susan Collins of Maine, tore into an array of current and former Goldman mortgage traders, including Fabrice "Fabulous Fab" Tourre, over the one fundamental question hanging over the whole financial catastrophe. Was Goldman honest with its clients about what was happening in the markets?
The answer to come this morning is obviously no. The internal communications at Goldman about the various deals they were peddling—including one called Timberwolf, described by a Goldman e-mail as "one s--tty deal"—show that what they were telling themselves and what they were telling clients were two completely different things.
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.
And yet the e-mails show that Goldman wasn't terribly open or straightforward either, looking to avoid sophisticated hedge funds as clients because they'd want to take the short side of many of these bad deals along with Goldman.
Goldman Sachs today became a laboratory specimen of greed wriggling pathetically under the needle that Carl Levin just stuck in it. Good for him!
Watch the hearings live here. Is Wall Street just blaming low-level officials for the crisis? Find out in our Blame Junior! gallery.
Uncommon Knowledge
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
