[THS] Goldman Sachs Lloyd Blankfein under fire at hearing

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Goldman Sachs' Lloyd Blankfein under fire at hearing

Lloyd Blankfein

Chairman and chief executive of world's biggest investment bank, Goldman Sachs
Earned more than $70m in 2007 - a record for a Wall Street boss. Took home less
than $1m in 2009 Told magazine interviewer last year "I'm doing God's work".

Profile: Lloyd Blankfein
Goldman's 150-year reputation on the line

Goldman Sachs' chief executive has denied his bank contributed to the US financial
crisis by betting some of its own investment products would fail.

Lloyd Blankfein and other executives at the Wall Street giant were accused by a US
Senate panel of acting unethically, while Americans lost jobs and homes.

Mr Blankfein said clients came looking for risk "and that's what they got".

The hearing comes as the US Congress considers the most sweeping reform of the
financial industry since the 1930s.

During hours of hostile questioning on Tuesday, Goldman executives were accused of
marketing some investments that the bank's own staff dismissed as "junk".

'Banksters'

The highly charged hearing saw fierce argument and occasional obscenities, while
protesters, some in striped prison outfits, waved signs reading "shame" and
"Goldman banksters".

Senator Carl Levin, chairman of the Senate Permanent Subcommittee on
Investigations, said Goldman had caused widespread harm to American society.

At the heart of the questioning was how Goldman packaged complex mortgage-
backed securities, marketed them to investors - but then bet - or shorted - that these
securities would fall in value.

"They're buying something from you, and you are betting against it. And you want
people to trust you? I wouldn't trust you," Mr Levin told Mr Blankfein.

The firm's "misuse of exotic and complex financial structures helped spread toxic
mortgages throughout the financial system," said Sen Levin.

"And when the system finally collapsed under the weight of those toxic mortgages,
Goldman profited from the collapse," he added.

FABRICE TOURRE
Fabrice Tourre, Executive Director, Goldman Sachs Structured Pr
31-year-old executive director of Goldman Sachs International
Charged with securities fraud for misleading investors Ran Abacus 2007-ACI, a
complex product at heart of regulator's probe. Denies charges Referred to himself as
"the fabulous Fab" in an e-mail

Goldman: 'Fab' Tourre's emails
Was what they did really wrong?

Mr Blankfein - who often squinted as if puzzled by the questions and was frequently
interrupted - strongly denied any wrong-doing.

The chief executive said clients had wanted an investment that would give them
exposure to the housing market.

"Unfortunately, the housing market went south very quickly... so people lost money in
it", he said.

But that did not mean Goldman had acted improperly, he insisted.

"Our clients' trust is not only important to us, it's essential to us. That's why we are a
successful firm," he said.

Mr Blankfein - who said late last year he was "doing God's work" - was the last of
seven past and present Goldman executives to testify.

Former mortgage chief Daniel Sparks came closest to an apology, telling the panel
that the bank had "made some poor decisions in hindsight".

Earlier, Fabrice Tourre - the London-based bond trader named in civil fraud case
against the bank - denied misleading investors by selling a financial product that the
bank had bet against.

Goldman says the charges brought by the Securities and Exchange Commission are
wrong in "fact and law".

Mr Tourre told the Senate panel: "I deny, categorically, the SEC's allegations. And I
will defend myself in court against this false claim."

Neither the hearing, nor Tuesday's market turmoil triggered by downgrades in Greek
and Portuguese debt harmed Goldman shares.

MARDELL'S AMERICA
Mark Mardell
 The senators lectured these would-be masters of the universe as if they were school
boys caught with their fingers in the jam
Mark Mardell
BBC North America editor
Read Mark's blog in full

They were up 0.7% at $153.04 (£100) by close of trading.

Elsewhere at the Capitol, Republicans succeeded for a second day in thwarting
moves to debate a bill for sweeping financial reform - the party floated their own
proposals.

With Congressional elections in November, Republicans and Democrats have been
urging stricter oversight of the financial sector, and analysts expect a bill to pass
eventually.

Source: BBC
http://news.bbc.co.uk/2/hi/business/8645945.stm