Goldman Sachs: Key trader denies wrongdoing as Senate panel opens probe
Fabrice P. Tourre, the Goldman Sachs trader at the heart of a federal civil fraud lawsuit, insisted on Monday that he was innocent of any wrongdoing as senators began their probe of the role of investment banking in the recent Wall Street turmoil.
Tourre, known as “fabulous Fab” in a series of e-mails released by the government, will face tough questions about his role in creating an investment vehicle that the government charges had been expected to fail. Tourre and Goldman face civil charges of fraud in connection with the dealings.
“I deny – categorically – the SEC’s allegation. And I will defend myself in court against this false claim,” Tourre, 31, said in testimony prepared for the Senate Permanent Subcommittee on Investigations. The executive argued that the deal was legitimate and not designed to fail as alleged.
Tourre was one of about half a dozen top executives at Goldman who will be questioned by the committee about Goldman’s role in the mortgage meltdown, which was widely blamed for the collapse of the financial system.
In its fraud case, the Securities and Exchange Commission says Goldman misled investigators about securities tied to home loans. Goldman put together the investment vehicle without telling buyers the mortgages had been chosen with help from a hedge-fund client, Paulson & Co., that was betting on the investments to fail.
In opening Tuesday’s hearing, subcommittee Chairman Carl Levin (D-Mich.) said the panel would focus on the type of legislation needed to protect Main Street from the excesses of Wall Street.
“It’s not just a matter of numbers on a balance sheet,” Levin said, citing the high rate of unemployment and the worst economic collapse since the Great Depression.
Levin, in his opening remarks, also castigated Goldman executives for creating investment vehicles that the public could not understand, investments that eventually exploded, bringing down the economy.
Today’s hearing had all the trappings of a true Washington media circus, with a horde of reporters and dozens of cameras.
As they have at several high-profile hearings since the financial crisis struck, the liberal activist group Code Pink showed up with signs and costumes to protest. This time, four of the group members, including co-founder Medea Benjamin, stood in the middle of the hearing room dressed in old-fashioned, black-and-white prison uniforms wearing signs that read either “Blankfein” for Goldman Chief Executive Lloyd Blankfein, or Tourre, for trader Fabrice Tourre, who was the focus of a fraud allegations filed this month against Goldman by the Securities and Exchange Commission.
“Put the banksters where they belong, behind bars,” was one of their chants, drawing off a term for corrupt bankers coined during the Great Depression. “Give our jobs back. Give our money back,” the protesters chanted. Their demonstration went on for at least 10 minutes in the hearing room shortly before the session began, longer than usual before being broken up by staff. When they did stop, the Code Pink protesters received applause from some of the audience.
-- Jim Puzzanghera, reporting from Washington,
and Michael Muskal, reporting from Los Angeles
Photo: Fabrice Tourre. Credit: Olivier Douliery / Abaca Press / MCT