Goldman Sachs E-Mail by Thomas Montag Described CDO as "One Shi**y Deal"

Goldman Sachs can kiss goodbye any chance it had of containing its fraudulent Subprime CDO mess to employee Fabrice Tourre aka "Fabulous Fab".

Please consider Goldman Sachs E-Mail by Montag Described CDO as ‘Shi**y Deal’

Thomas Montag, the former head of sales and trading in the Americas at Goldman Sachs Group Inc., called a set of mortgage-linked investments sold by his firm “one shi**y deal,” according to an excerpt from internal e-mails released today by Senate lawmakers.

The transaction was Timberwolf Ltd., a $1 billion collateralized debt obligation holding pieces of other CDOs, according to a statement today from the Permanent Subcommittee on Investigations. The CDO also included optimistic side-bets on the performance of CDOs, or derivatives, in which the firm took the opposite pessimistic side in “many” cases, the panel said.

“Boy that timberwo[l]f was one shi**y deal,” Montag, who is now Bank of America Corp.’s president of global banking and markets, said in a June 22, 2007, e-mail to Daniel Sparks, who ran Goldman Sachs’s mortgage business at the time, according to the panel’s statement. Within five months of Timberwolf’s debut, the CDO had lost 80 percent of its value, and it was liquidated in 2008, according to the panel.

Sparks, who left the bank in 2008, in one e-mail urged “personnel working on a potential Korean sale to ‘[g]et ‘er done,’ and sent a mass e-mail to the sales force promising “’ginormous credits’ for selling” the debt, according to Levin’s statement. “A congratulatory e-mail was sent to an employee who sold a number of the securities: ‘Great job … trading us out of our entire Timberwolf Single-A position,’ ” the panel said.

Goldman Hires PR Firms to Clear its Name

Goldman Sachs is not backing down. Inquiring minds note Goldman wages PR fight to clear its name.

Goldman has hit back hard against civil fraud charges with a public relations blitz aimed at poking holes in the Securities and Exchange Commission's case and repairing the bank's reputation. Every time the SEC has punched, Goldman has quickly counterpunched.

To help its cause, Goldman has hired Mark Fabiani, a big player in the PR world with strong ties to top Democrats. Fabiani earned the nickname "Master of Disaster" for his handling of crises during the Clinton administration. He now works as a media consultant specializing in corporate crisis management. Goldman has also brought in top corporate attorneys. And its executives, including CEO Lloyd Blankfein, have been out in public, not hunkering down.

The damage control efforts will be on display Tuesday when Blankfein and Fabrice Tourre, the employee named in the SEC fraud charges, are questioned by a Senate subcommittee probing the bank's role in the financial crisis.

Goldman's PR campaign, which runs counter to its long history of secrecy, is a bold yet risky move. Some analysts say a poor performance on Capitol Hill could worsen the bank's image problems and make it harder for it to attract and retain lucrative clients. If the strategy fails, analysts say, it could cost Blankfein and other Goldman executives their jobs.

Top financial law firm Sullivan & Cromwell LLP is heading Goldman's defense. The lead lawyer is Richard Klapper, who represented Barclays Capital when Enron shareholders sued the investment firm in 2007. Goldman has also hired Gibson, Dunn & Crutcher, the law firm of former U.S. Solicitor General Theodore Olson, and K. Lee Blalack, a partner in Washington-based law firm O'Melveny. Rounding out the team is Greg Craig, the former chief counsel under President Barack Obama.

None of the law firms responded to requests for comment.

Goldman "has become an iconic image of bankers with conflicts of interest," said John Coffee, securities law professor at Columbia Law School. "That image is out there in the public's mind and will be out there in 10 years."

I side with John Coffee.

Repeating a comment I made yesterday ... I have a serious problem with a "bank" making 90% of its income trading its own portfolio, and screwing its customers in the process, whether it's legal or not.

This will not go away quickly.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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