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Goldman Sachs: E-mails reveal internal doubts, questions about packaged securities

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Goldman Sachs executives testifying Tuesday have avoided expressing any regret for the money that people lost on the toxic securities that the firm packaged and sold.

But among the 900 pages of e-mails released by the Senate investigative committee Tuesday there is an indication that some within the firm were unhappy with the way in which the Goldman’s clients lost big on products sold by the firm, such as the ABACUS security that Goldman is being sued over.

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In one e-mail from October 2007, after a European bank lost hundreds of millions on ABACUS, a Goldman employee writes about the sentiment among some of the firm’s European employees: ‘Real bad feeling across European sales about some of the trades we did with clients. The damage this has done to our franchise is very significant. Aggregate loss for our clients on just these 5 trades alone is 1bln+.’

Shortly before this e-mail went out, Fortune magazine wrote a story pointing out how Goldman had profited while so many others had lost. This occasioned an e-mail exchange among executives in which Peter Kraus, a top executive, discussed the feedback from clients who, he noted, might say to Goldman: ‘ur good at making money for urself but not us.’

Kraus said that big institutional clients have not spoken up on the point, but that individual clients have at times been unhappy about this contrast between the success of the firm and the success of the firm’s clients.

Kraus, though, noted that while some clients express unhappiness, they realize that being with Goldman is good for them in the end: ‘I feel very strongly it binds clients even closer to the firm, because the alternative of take ur money to a firm who is an under performer and not the best, just isn’t reasonable.’

Elsewhere in the firm, Goldman executives were clear about the fact that it was their responsibility to take advantage of the ill-fortune of those around them.

‘There will be very good opportunities as the markets goes into what is likely to be even greater distress and we want to be in position to take advantage of them,’ wrote the firm’s Chief Financial Officer David Viniar.

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-- Nathaniel Popper in New York

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