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Goldman's E-mail Disclosure War

Goldman Sachs and a Senate subcommittee each releasing internal Goldman e-mail messages over the weekend to push their respective agendas.
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and a Senate subcommittee engaged in a pitched battle over the weekend, with each party releasing internal Goldman e-mail messages from before the market meltdown to push their respective agendas.

First the Senate Permanent Subcommittee on Investigations released four e-mail exchanges by Goldman Sachs executives on Saturday. The main purpose of the emails appeared to be to show that Goldman knew the U.S. mortgage market was in trouble and profited by betting against it.

The subcommittee will hold a hearing Tuesday that looks at "the role of investment banks in contributing to the worst economic crisis since the 1930s," subcommittee chairman Carl Levin (D., Mich) wrote in a statement accompanying the release of the e-mail messages.

Goldman countered later that day by releasing twenty-five PDF files containing internal documents of its own, many of which were e-mail messages between senior Goldman executives.

The extra disclosure from Goldman was a repeat of its position that the firm "did not make a significant amount of money in the mortgage market," as spokesman Lucas van Praag said in a statement. To emphasize this point, the release showed quarterly revenues in the firm's residential mortgage business compared to the firm's overall revenues. According to this data, Goldman lost slightly more than it made in that business in 2007 and 2008.

Goldman Defends Housing Investments

For some, the dueling e-mail releases did little to shed any convincing light on the controversy stirred up more than a week ago by the

Securities and Exchange Commission's

filing of civil fraud charges against Goldman Sachs and trader Fabrice Tourre.

"It appears that everyone has e-mails to support just about any view they wish to espouse," wrote Rochdale Securities analyst Richard Bove, in a report published Monday. Bove has a buy rating on Goldman and a $200 target price.

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One somewhat unusual part of Goldman's release was that it contained several emails between Tourre, a mid-level Goldman executive who so far is the only individual charged in the SEC's fraud case and his girlfriend.

The SEC had released part of one of Tourre's emails when it announced its complaint against him.

"More and more leverage in the system, The whole building is about to collapse anytime now...Only potential survivor, the fabulous Fab

rice Tourre...standing in the middle of all these complex, highly leveraged,exotic trades he created without necessarily understanding all of the implications of those monstruosities!!!," the excerpt accompanying the SEC's complaint read.

Goldman went ahead and released the entire exchange, along with three other Tourre e-mails.

In the full e-mail, Tourre tempered his now infamous description of himself as "the fabulous Fab," writing: "Only potential survivor, the fabulous Fab (as Mitch would kindly call me, even though there is nothing fabulous abt

sic me, just kindness, altruism and deep love for some gorgeous and super-smart French girl in London), standing in the middle of all these complex, highly levered, exotic trades..." to girlfriend Marine Serres in the Jan. 23, 2007 e-mail.

Still, some commentators, have argued Goldman has "thrown Tourre under the bus," by disclosing so many of his personal e-mails, in which he appears fairly naive in contrast to higher level executives at the firm.

Tourre, who is on indefinite paid leave from Goldman, according to

The Wall Street Journal

, and CEO Lloyd Blankfein are among those expected to testify at the Senate hearing Tuesday.

Goldman shares opened lower Monday and were down more than 3% in recent trades, changing hands at $152.58. They were above $180 on the morning of April 16, just before the fraud charges became public.


Written by Dan Freed in New York


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