Josh Birnbaum: The Shorts Were Not A Hedge


In 2007, Goldman’s Josh Birnbaum gave an internal presentation that seems to contradict what Goldman Sachs’ executives, including Lloyd Blankfein, have said about their trades against the subprime market.

The firm insists that their CDO shorts on subprime assets were simply a hedge.

But look what John Birnbaum told the firm during a presentation on 10/3/2007 called “SPG Trading – 2007.”

“By June, all retained CDO and RMBS positions were identified already hedged. … SPG trading reinitiated shorts post BSAM [Bear Stearns Asset Management] unwind on an outright basis with no accompanying CDO or RMBS retained position longs. In other words, the shorts were not a hedge.”

SPG is Goldman’s “Structured Products Group.”

This is just one reason why Senator Levin brought up the possibility of investigating the Goldman execs for perjury.

Here’s another.

Goldman trader Deeb Salem wrote in 2007 in his self review (as an example of what he did WELL that year):

“In May, while we were remain[ing] as negative as ever on the fundamentals in sub-prime, the market was trading VERY SHORT, and susceptible to a squeeze. We began to encourage this squeeze, with plans of getting very short again, after the short squeezed [sic] cause[d] capitulation of these shorts. This strategy seemed do-able and brilliant, but once the negative fundamental news kept coming in at a tremendous rate, we stopped waiting for the shorts to capitulate, and instead just reinitiated shorts ourselves immediately.”

Michael Swenson’s emails look pretty bad too.

Will the Goldman execs be charged with perjury? Senator Levin referred the matter to the DOJ.