The legal storm buffeting Goldman Sachs intensified on Monday as Senate investigators claimed the Wall Street giant had devised not one but a series of complex deals to profit from the collapse of the home mortgage market.
The claims suggested for the first time that the inquiries into Goldman were stretching beyond the sole mortgage deal — Abacus 2007-AC1 — singled out by the Securities and Exchange Commission (SEC).
The latest claims came on the eve of what is expected to be a contentious Senate hearing on Tuesday, at which Goldman Sachs executives plan to defend their actions.
The stage for that hearing was set with a flurry of new documents from the panel, the Permanent Senate Subcommittee on Investigations.
In the midst of this storm, Lloyd C Blankfein, Goldman's chairman and chief executive, plans to sound a conciliatory note on Tuesday. In a statement prepared for the hearing and released on Monday, Blankfein said the news 10 days ago that the SEC had filed a civil fraud suit against Goldman had shaken the bank's employees.
Blankfein will also testify that Goldman did not have a substantial, consistent short position in the mortgage market.
But at the press briefing in Washington, Carl Levin, the Democrat of Michigan who heads the Senate committee, insisted that Goldman had bet against its clients repeatedly. He held up a binder the size of two breadboxes that he said contained copies of e-mail messages and other documents that showed Goldman had put its own interests first.
"The evidence shows that Goldman repeatedly put its own interests and profits ahead of the interests of its clients," Levin said.
Levin's investigative staff released a summary of those documents, which are to be released in full on Tuesday. The summary included information on Abacus and new details about other complex mortgage deals.
The New York Times