Goldman Sachs takes aim at Senate report

Thursday, January 9th, 2014 By

Night view of the Goldman Sachs building on the harbor front at Paulus Hook in, Jersey City, N.J.

Goldman Sachs claims the Senate subcommittee's characterization of its subprime business was “sloppy and incomplete.” (Photo Credit: CC BY/Ludovic Bertron/Flickr)

Goldman Sachs Group Inc., the securities firm Sen. Carl Levin, D-Mich., once described as a “financial snake pit, rife with greed, conflicts of interest and wrongdoing,” is preparing to strike back. The Wall Street Journal reports that the firm plans to counter the Senate’s financial crisis subcommittee’s 639-page report, which alleges that Goldman Sachs sought to profit by betting against the housing market and betraying its clients. Reports indicate that Goldman’s defense will focus on what the company believes to be “sloppy math” on the part of federal regulators.

‘Sloppy math and incomplete analysis’

The Senate Permanent Subcommittee on Investigations went through tens of millions of documents disclosed by Goldman Sachs, yet the securities firm says in its defense that the Senate’s analysis was incomplete. Goldman Sachs has not denied that the firm profited from the subprime mortgage crisis as prices fell and borrowers defaulted, creating the big short. However, the firm believes data suggest the Senate’s numbers are inaccurate.

One document the Senate found particularly damning for Goldman Sachs was a chart that characterized the company’s net short positions against the housing market being as high as $13.9 billion on June 25, 2007. Goldman says that number appears artificially large when juxtaposed against the 2007 net revenue of $11.6 billion the Senate reported. Goldman claims its actual net revenue was $46 billion.

Insider trading, truthful and accurate

The WSJ reports that Goldman Sachs will use data on bullish mortgage trades to temper the opportunistic venom behind such numbers, data to which the Senate already had access but chose not to highlight in its report. Goldman argues that billions of dollars in bullish trades – as well as more than $5 billion invested in prime mortgage bonds – more than offset the subprime short bets.

Despite the fact that former Goldman Sachs corporate board member Rajat Gupta backed away from his position following allegations of insider trading, the firm maintains that its dealings with the U.S. government have been “truthful and accurate,” according to a company representative for CEO Lloyd Blankfein.

Goldman Sachs gambled more than $1 billion of Gaddafi’s money


The Atlantic Wire

Goldman Sachs

Wall Street Journal

Previous Article

« Manage your financial problems regardless of your credit status

Regardless of your credit history, you can manage your current financial situation with a payday loan.
Next Article

Debt Relief Looms as Another Giant Files Bankruptcy »

Debt relief may still be a long way off as Extended Stay Hotels LLC files for bankruptcy protection. Comforts of home at Extended Stay America (photo by

Other recent posts by Steve Tarlow

Google Voice for iPhone – Free Calls and SMS via Wi-Fi

Google Voice on iPhone is now a reality, as Google has circumvented the Apple's App Store process by making it a web app that works in the Safari browser.

One to grow on: Top 5 ways to spend your lunch hour

If lunch hour means nothing to you, check your head. These top 5 ways to spend your lunch hour can improve your life significantly.

Elizabeth Warren on credit cards, banks and payday loans

Elizabeth Warren of the Consumer Financial Protection Bureau told the Associated Press the organization supports the payday lending industry.
Mock Photoshop illustration of Elizabeth Warren's face on the U.S. dollar bill.