Emails Show Goldman Sachs May Have Tried To Profit From Housing Drop
It is believed that Goldman Sachs & Co. tried to profit from the drop
in the U.S. housing market. A Senate investigation was conducted into
the financial crisis and what was discovered reflects poorly on Goldman.
According to Sen. Carl Levin, D-Mich., chairman of the Permanent Subcommittee on Investigations, four internal emails that were just released go against Goldman’s claim that it didn’t try to profit from the burst of the housing bubble. Levin told The Washington Post, “Goldman made a lot of money by betting against the mortgage market.”
One internal Goldman document, which was created for senior executives, provides details about meetings and correspondence that eventually led to the decision to lower the investment bank’s exposure to the U.S. mortgage market. Allegedly, the plan was to put together new investments that would profit from a housing downturn.
An email that was acquired by the Senate committee showed that the investment bank made $50 million in just one day, because of its bets that the housing market would drop. This email contained Goldman’s chief financial officer, David Viniar’s response to these earnings. “Tells you what might be happening to people who don’t have the big short,” wrote Viniar.
Another email from October 2007 was just as disturbing. Goldman mortgage trader Michael Swenson, responded to the news that credit-rating companies downgraded mortgage-related investments by writing, “sounds like we will make some serious money.”
A little over a week ago, the U.S. Securities and Exchange Commission charged Goldman withsecurities fraud, claiming that the investment bank misled clients by selling them on mortgage-related securities that were doomed to fail.