Wealth Finance

A Goldman Sachs trader admitted in e-mails that the money-losing investments he sold were “like Frankenstein turning against his own inventor.”

The glib messages from Fabrice Tourre were written as mortgage-backed investments he pushed on “widows and orphans” began to tank – which was great for Goldman since that’s exactly what they bet would happen.

The e-mails were released yesterday by Goldman, which admitted they were “highly embarrassing.” The bank put out the e-mails and other documents in response to a set of internal e-mails made public by a Senate panel set to grill Goldman execs this week.
Sen. Carl Levin (D-Mich.) said the documents he posted on his Web site show Goldman “made a lot of money by betting against the mortgage market.”

“Of course we didn’t dodge the mortgage mess,” Goldman CEO Lloyd Blankfein wrote on Nov. 18, 2007. “We lost money, then made more than we lost because of the shorts.” Shorts are bets that the market will go down.

Goldman claimed the Senate was cherry-picking evidence and swiftly released documents showing 2007 gains from shorting were dwarfed by 2008 losses.

The trove included numerous e-mails from Tourre, like a Jan. 29, 2007, message to a girlfriend in which he mused about a troubled investment product he helped create.

“It’s a little like Frankenstein turning against his own inventor,” he said.

In another message, Tourre cracked about selling the investment to “widows and orphans.”

He also recounted that the head of Goldman’s U.S. subprime mortgage business told him “the poor little subprime borrowers will not last so long!!!”

The Securities and Exchange Commission filed charges this month accusing Tourre of misleading clients about investments that were created to fail. Goldman has denied wrongdoing.

Here are highlights of trader Fabrice Tourre’s e-mails:

“Anyway, not feeling too guilty about this, the real purpose of my job is to make capital markets more efficient and ultimately provide the U.S. consumer with more efficient ways to leverage and finance himself, so there is a humble noble and ethical reason for my job amazing how good I am in convincing myself!!!”

- Jan. 27, 2007

“When I think that I had some input into the creation of this product – which by the way is a product of pure intellectual masturbation, the type of thing which you invent telling yourself: ‘Well, what if we created a “thing,” which has no purpose, which is absolutely conceptual and highly theoretical and which nobody knows how to price?’ – it sickens the heart to see it shot down in mid-flight…. It’s a little like Frankenstein turning against his own inventor.”

Previous Page 12 Next Page

Similar Posts:

• Goldman Sachs hit with discrimination lawsuit
• Goldman Sachs director ensnared in Galleon insider-trading probe
• Bank of America will delay foreclosures in 23 states
• International REITs
• No Year-End Bonuses For Goldman Sachs Execs