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Goldman Sachs Faces Wrath Of Senators

Goldman Sachs, looking to unload toxic securities connected to the U.S. housing market, stepped up its efforts to sell those products to clients in 2006 and 2007, according to newly disclosed internal emails. The emails, some of which were from Goldman Sachs CEO Lloyd Blankfein, show that Goldman’s employees discussed how to “arm” its salespeople to get rids of the bonds that the company deemed too risky to keep.

The emails were released publicly on April 27 by Senator Carl Levin. Levin heads the Senate’s Permanent Subcommittee on Investigations, which is conducting a hearing about Goldman’s role in the financial crisis. Earlier this month, the Securities and Exchange Commission (SEC) filed fraud charges against Goldman and one of its employees, Fabrice Tourre.

Goldman continues to deny that it did anything wrong when it created a synthetic collateralized loan obligation that caused about $1 billion in losses while undertaking other transactions that allowed the company to profit when the housing market collapsed.

During the Senate hearing, Senator Levin said that Goldman had advertised itself as having a responsibility to its clients, “yet the evidence shows that Goldman repeatedly put its own interests and profits ahead of the interests of its clients.” Levin further stated that Goldman had crossed “ethical lines” in selling collateralized debt obligations to clients while standing to gain from their losses.

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