Monday, April 26, 2010

Goldman Misled Clients and Nation - and Made Billions

Washington - Goldman Sachs reaped "billions and billions of dollars" in profits by secretly betting in 2006 and 2007 that the U.S. housing market would crash, a strategy that conflicted with the interests of its clients who were still buying the firm's risky mortgage securities, Senate investigators said Monday.

"The evidence shows that Goldman repeatedly put its own interests and profits ahead of the interests of its clients," Sen. Carl Levin, D-Mich, the chairman of the Permanent Investigations Subcommittee, told a news briefing. "I think they've been misleading to the country."

The panel provided the first detailed glimpse of its findings from an 18-month investigation into the world's most prestigious investment bank, setting the stage for a hearing Tuesday at which Goldman's chief executive, Lloyd Blankfein, and six other company executives will give sworn testimony.

Blankfein, in testimony prepared for delivery Tuesday, denied that Goldman orchestrated a "massive short," or a series of negative bets that enabled it to ring up huge profits when the housing bubble burst and sank the nation's economy.

"And we certainly did not bet against our clients," he said.

The subcommittee's findings bolstered reports in November and December by McClatchy that Goldman had marketed $57 billion in risky mortgage securities, including $39 billion backed by mortgages that it bought from lenders, in 2006 and 2007, without telling investors that it was secretly making bets on a housing downturn.

rest http://www.truthout.org/senate-probe-goldman-misled-clients-and-nation-%E2%80%94-and-made-billions58891

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