By now you know that the Senate has come down hard on Goldman. This weekend they released a number of the firm’s internal emails and said about Goldman:
“Investment banks such as Goldman Sachs were not simply market-makers, they were self-interested promoters of risky and complicated financial schemes that helped trigger the crisis.”
What we found is not nearly so damning.
Here’s the gist of what we picked up from the 100 pages of emails and documents released by Goldman and published on the New York Times:
- Goldman got in on the short side circa February 2007. pg. 76 and pg. 69
- It was still “ramping up” in CDOs as of November 2006. It slowed in December pg. 76 and closed positions in Q1’07 pg. 69.
- From March to August 2007, its position changed from net-long $0.1 billion on March 15 to net-short $0.1 billion on August 31. It decreased the number of funds allocated to the subprime mortgage business by $5 billion pg. 59
- In August 2007, Goldman urgently unwound a number of positions. Its risk of losing money on portfolios was climbing and COO Gary Cohn wrote in an email August 15, “there is no room for debate – we must get down now.” pg. 75
- By November 2007, Goldman’s net exposure to the subprime mortgage business was half that of Merrill Lynch and nearly 1/5 of Citi’s. pg. 74
The third bullet point might be the most interesting because it shows Goldman did not lean substantially towards taking one position on subprime mortgages. Its $5 billion exit from the subprime business was a much stronger move than its short position.
For more on Goldman’s emails, take a look at the one that quotes the “intellectual masturbation” of creating a CDO, the real Fabulous Fab email, and an email Tourre sent his ex-girlfriend. Clearly there are a lot of eye-openers in here, and more could come, but from our scan so far the SEC seems to have overemphasized some of the details.
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