GOLDMAN Sachs chief executive Lloyd Blankfein has said that the day the SEC civil fraud charges against his firm became public earlier this month was “one of the worst days in my professional life.”
In written testimony released ahead of a Senate hearing a clearly affected Blankfein said: “We have to do a better job of striking the balance between what an informed client believes is important to his or her investing goals and what the public believes is overly complex and risky.”
Blankfein also promised to listen to public opinion more.
Carl Levin, the chairman of the US Senate subcommittee on investigations, warned last night that Goldman Sachs has “a lot to answer for”, as senior executives from the bank prepare to face a grilling on Capitol Hill today.
Among those appearing before the subcommittee are Blankfein, chief financial officer David Viniar and chief risk officer Craig Broderick, who will all give evidence on the bank’s role in the crisis, particularly its marketing of securities linked to sub-prime mortgages.
Fabrice Tourre, the man fingered by the Securities and Exchange Commission (SEC) in its civil fraud lawsuit against Goldman, will also be led out to testify on his part in creating and marketing the synthetic collateralised debt obligation (CDO) at the heart of the allegations.
“Goldman Sachs was slicing, dicing, and selling toxic mortgage-related securities on Wall Street like many other investment banks, but its executives continue to downplay the firm’s role in the [crisis],” Levin said. “They have a lot to answer for.”
Levin at the weekend went on the offensive by releasing email evidence which the committee will use to support its claim that Goldman raked in billions of dollars in profits by betting against the mortgage market.
Goldman hit back at the committee by releasing its own evidence, including intimate emails from Tourre to his then-girlfriend, which it claims prove there were differences of opinion at the top level within the bank. It claims Goldman racked up net losses of over $1.2bn (£777m) in residential mortgage-related products over the period.
SENATOR CARL LEVIN
CHAIRMAN OF THE SENATE SUBCOMMITTEE ON INVESTIGATIONS
NOW in his seventies, Senator Carl Levin – the man Lloyd Blankfein, Fabrice Tourre et al will face later on today at the Senate subcommittee on investigations – has lost none of his fearsome reputation.
Levin, a Harvard-educated lawyer-turned-Democratic senator for Michigan, is best known for his role in leading the investigation in the wake of the Enron collapse. Leaving bank executives from the likes of JP Morgan and Citigroup visibly trembling in his wake, his investigative work contributed much of the basis for the corporate accounting reforms contained within the Sarbanes-Oxley Act in July 2002.
Since then, he has led investigations into US energy prices, abusive credit card industry practices and off-shore tax havens as part of a self-styled crusade to put a stop to corporate excess and malpractice.
Levin was also a vocal opponent of the US invasion of Iraq and is a supporter of servicemen and women in his position as chairman of the Senate armed services committee.