Goldman Sachs: Senate frustrations grow over execs’ responses to questions
This article was originally on a blog post platform and may be missing photos, graphics or links. See About archive blog posts.
The frustrations from senators bubbled up quickly as they launched into questions revolving around Goldman Sachs’ complex financial transactions. The four Goldman employees on the first panel asked for time to read e-mails they were directed to in the thick stack of committee documents, and then sparred with a Senate investigations subcommittee over how the questions were framed. Panel Chairman Sen. Carl Levin (D-Mich.) pressed Daniel Sparks, the head of Goldman Sachs’ mortgage department from late 2006 until mid-2008, about a mortgage security the investment bank was trying to sell that contained loans from New Century, which had a reputation for high default rates. When a client asked Goldman how it got “comfortable” with the New Century collateral in the deal, internal Goldman e-mails showed Goldman’s mortgage department telling its sales staff to keep pushing for the sale of securities. When sales were finally made, one employee sent a single word e-mail that said, “Profit!”
Levin said the subcommittee’s investigation showed that Goldman had taken a short position on the securities and pressed Sparks to say whether that should have been disclosed to clients. But Sparks said the documents were not clear about whether Goldman took a short position, and he and Levin got into a dispute about that point that lasted several minutes.
As Levin pressed Sparks to say whether he should have told clients about the short position, Sparks declined to answer directly, apparently because he thought the question was hypothetical.
As Sparks said he was trying to understand the question, Levin responded, “You understand the question. You don’t want to answer it.” The questioning later became almost farcical as Levin continually pressed Sparks about an e-mail in which his Goldman supervisor used an expletive to refer to one particular deal.
Levin repeated the term several times as he continually pushed for an answer.
The frustrations mounted as Sen. Susan Collins (R-Maine) began her 20 minutes of questioning. She pressed Fabrice P. Tourre, the Goldman Sachs trader at the heart of a federal civil fraud lawsuit, about e-mails he wrote saying he preferred to deal with less-sophisticated clients.
“This sounds like a deliberate attempt to sell your products to less-sophisticated clients who would not understand the products as well so that you could make more money. Would you like to comment on that?” Collins asked Tourre.
But Tourre, like other witnesses, did not answer directly. Collins complained to Levin.
“Mr. Chairman, I cannot help but get a feeling that a strategy of the witnesses is to try to burn through the time of each questioner,” she said.
Levin agreed, and vowed it would not succeed.
“There may be a strategy…but it’s not going to work,” he told the witnesses. “We’re going to stay here as long as it takes to get the answers for the public.”
-- Jim Puzzanghera reporting from Washington