bobbyw24
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By Tomoeh Murakami Tse
Washington Post Staff Writer
Wednesday, April 7, 2010; 4:34 PM
NEW YORK -- Goldman Sachs, the investment bank that has emerged as a Wall Street leader and the target of public ire in the aftermath of the financial crisis, said Wednesday it did not unfairly bet against clients in the mortgage securities market and defended its relationship with American International Group.
It was "grateful" for the government assistance during the market turmoil, Goldman chief executive officer Lloyd Blankfein and chief operating officer Gary Cohn said in the firm's annual letter to shareholders.
"The firm did not generate enormous net revenues or profits by betting against residential mortgage-related products, as some have speculated," the executives wrote. "Rather, our relatively early risk reduction resulted in our losing less money than we otherwise would have when the residential housing market began to deteriorate rapidly."
The eight-page letter was made public Wednesday ahead of the firm's May 7 annual meeting with shareholders and comes after more than a year of withering attacks of its business practices, including multibillion-dollar bonuses, from lawmakers in Washington.
In the letter, the company reiterated many of the arguments it has made to deflect that negative publicity. But reaction from Goldman critics indicated the letter did little to improve its public image.
"Its shareholders letter is just evasive action," said Janet Tavakoli of Tavakoli Structured Finance. Goldman executives "are distracting people from their own duties and responsibilities. When they created a lot of these packages of loans, it was their responsibility, their duty as an underwriter to investigate the character of the underlying loans . . . not their customers, not their clients.
Earlier this year, Blankfein faced pointed questioning by the Financial Crisis Inquiry Commission established by Congress. Philip Angelides, the commission's chairman, accused the firm of selling of subprime mortgage-backed securities and then taking bets that they would default, likening Goldman to a car salesman who sells vehicles with "faulty brakes, and then [takes out] an insurance policy on the buyer of those cars."
http://www.washingtonpost.com/wp-dyn/content/article/2010/04/07/AR2010040701697.html?hpid=topnews
Washington Post Staff Writer
Wednesday, April 7, 2010; 4:34 PM
NEW YORK -- Goldman Sachs, the investment bank that has emerged as a Wall Street leader and the target of public ire in the aftermath of the financial crisis, said Wednesday it did not unfairly bet against clients in the mortgage securities market and defended its relationship with American International Group.
It was "grateful" for the government assistance during the market turmoil, Goldman chief executive officer Lloyd Blankfein and chief operating officer Gary Cohn said in the firm's annual letter to shareholders.
"The firm did not generate enormous net revenues or profits by betting against residential mortgage-related products, as some have speculated," the executives wrote. "Rather, our relatively early risk reduction resulted in our losing less money than we otherwise would have when the residential housing market began to deteriorate rapidly."
The eight-page letter was made public Wednesday ahead of the firm's May 7 annual meeting with shareholders and comes after more than a year of withering attacks of its business practices, including multibillion-dollar bonuses, from lawmakers in Washington.
In the letter, the company reiterated many of the arguments it has made to deflect that negative publicity. But reaction from Goldman critics indicated the letter did little to improve its public image.
"Its shareholders letter is just evasive action," said Janet Tavakoli of Tavakoli Structured Finance. Goldman executives "are distracting people from their own duties and responsibilities. When they created a lot of these packages of loans, it was their responsibility, their duty as an underwriter to investigate the character of the underlying loans . . . not their customers, not their clients.
Earlier this year, Blankfein faced pointed questioning by the Financial Crisis Inquiry Commission established by Congress. Philip Angelides, the commission's chairman, accused the firm of selling of subprime mortgage-backed securities and then taking bets that they would default, likening Goldman to a car salesman who sells vehicles with "faulty brakes, and then [takes out] an insurance policy on the buyer of those cars."
http://www.washingtonpost.com/wp-dyn/content/article/2010/04/07/AR2010040701697.html?hpid=topnews
