Goldman Sachs hearing pulls back curtain on bankers' ethics
| Washington
Goldman Sachs officials defended their firm鈥檚 role on Wall Street at a Senate hearing on Tuesday 鈥� but they faced tough questioning about their ethics from clearly skeptical lawmakers.
At times the hearing seemed like a clash of different world views. From the dais, senators of both parties asked a panel of current and former Goldman executives about their responsibilities to inform and guide clients. Behind the table, the investment bankers described themselves as a sort of high-level facilitation team, implementing trades that sophisticated investors had decided they wanted to make without Goldman advice.
Frustrated senators
At one point, Sen. Carl Levin (D) of Michigan, chairman of the investigations subcommittee holding the hearing, pressed a former top Goldman aide as to whether he should have sold a subprime mortgage investment so questionable that an internal company e-mail described it with a vulgarity.
鈥淭here are prices in the market at which people want to invest in things,鈥� said the official, Daniel Sparks, a former head of Goldman鈥檚 mortgage department.
Senator Levin took that answer as an evasion of the question. Following him, Sen. Susan Collins (R) of Maine, one of the subcommittee鈥檚 ranking Republicans, attempted the same question.
鈥淪enator, I had a duty to act in a straightforward and open way with my clients,鈥� said Mr. Sparks.
Collins also took that as an evasion of responsibility as to the ethics of the transaction.
鈥淚鈥檓 starting to share [Levin鈥檚] frustration and I鈥檓 only 30 seconds into my time,鈥� said Senator Collins.
The SEC case
The hearing of the Senate Homeland Security and Governmental Affairs Committee鈥檚 Permanent Subcommittee on Investigations comes at a time when the Securities and Exchange Commission (SEC) has filed fraud charges against Goldman for its role in selling a subprime mortgage investment without telling clients it had been put together by a hedge fund that was betting on it to fail.
The only individual named in that suit, Goldman vice president Fabrice Tourre, appeared before the Senate panel Tuesday and defended his actions.
鈥淚 deny, categorically, the SEC鈥檚 allegation, and I will defend myself in court against this false charge,鈥� said Tourre.
But it was quickly apparent that there would be little sympathy for Goldman from most of the assembled senators of both parties.
Sen. John McCain (R) of Arizona said that while it was possible Goldman did nothing illegal, the documents provided by the firm contained numerous instances of bragging about profit from betting against the housing market and other actions that US taxpayers might see as unseemly.
鈥淭here鈥檚 no doubt [Goldman official鈥檚] behavior was unethical and the people will render a judgment as well as the courts,鈥� said Senator McCain.
Related:
Goldman Sachs on mortgage crisis: 'Serious money' to be made
Goldman Sachs vs. SEC: 'Vampire squid' or 'doing God's work'?
