No contrition in financial blame game

April 28, 2010 at 12:00a.m.

Associated Press

WASHINGTON

Two deeply unpopular U.S. institutions — Congress and Wall Street — slung blame for the shaky economy around a Senate hearing room Tuesday, none of it landing among the dark suits at the witness table or the politicians behind the dais.

Senators, several up for re-election this fall, prosecuted their scapegoats of the moment for peddling toxic investments without disclosing their risks.

The Goldman Sachs executives who had raised their hands and sworn to tell the truth gave up nothing. Their reward: Goldman’s stock rose 0.7 percent, to $153.04, despite the nine-hour grilling.

Didn’t Goldman have a moral obligation to tell clients that the securities it was selling were deemed “crap” by the banking giant’s own people, Chairman Carl Levin asked.

“No, I don’t think we would have to tell them,” said Goldman CEO Lloyd Blankfein, alone at the witness table.

His underlings explained repeatedly through the nine-hour hearing: Goldman’s sellers were acting as “market makers,” not investment advisers.

And no, Goldman’s executives don’t feel responsible for helping drive the nation into an economic recession.

“‘Regret’ to me means something that you feel like you did wrong,” said Daniel Sparks, the former head of Goldman’s mortgages department. “I don’t have that.”

“I believe my conduct was proper,” said Fabrice Tourre, a 31-year-old Goldman trader named as a defendant in a civil suit filed by the Securities and Exchange Commission.

Questions of risk and trust — political, financial, personal — coursed through the proceedings that gathered some of the nation’s financial rule-makers and players in the same room, kept cold to balance the heat from the television lights.

All had much to gain from credible performances. Recent polls show that less than 30 percent of the public hold favorable opinions of Congress and Wall Street.

Levin, D-Mich., glared over his eyeglasses as he made much of an internal, expletive-laden Goldman e-mail:

“‘Boy, that Timberwolf was one s----- deal,’” Levin read into the microphone. Goldman Sachs nonetheless continued selling that investment.

“You knew it was a s----- deal,” Levin scolded, using the expletive a dozen times during the daylong hearing. “Should Goldman Sachs be trying to sell a s----- deal?”

Republicans and Democrats criticized the executives with equal enthusiasm, casting them as gamblers with other people’s money. Rising anger at Wall Street, perhaps, might dilute public anger at Congress.

Democrats hoped to turn the emotion into momentum for their legislation regulating the financial industry that has stalled in the Senate.

Asked whether Goldman played a part in the economic downturn, Joshua S. Birnbaum, a former managing director, allowed: “It’s possible.”