Money & Company

Tracking the market and economic trends
that shape your finances.

« Previous Post | Money & Company Home | Next Post »

Another hit to Goldman's image; 'politically tone deaf'?

June 7, 2010 |  7:00 pm

It’s hard to imagine that Goldman Sachs & Co. would want to give the government another opportunity to paint the firm as an enemy of the state. Yet that’s exactly what the bank did by stonewalling the federal panel investigating the financial crisis.

The Financial Crisis Inquiry Commission on Monday said it had subpoenaed Goldman after the firm continued to stiff the commission on specific documents and interviews it had requested.

In a media conference call early Monday, FCIC Chairman Phil Angelides and Vice Chairman Bill Thomas excoriated Goldman for its lack of cooperation in recent months, which they said contrasted with the responses from other big Wall Street banks.

For its part, Goldman appeared not to understand how it could have offended the commission. “We have been and continue to be committed to providing the FCIC with the information they have requested,” a spokesman said via e-mail.

Fcicpanel But Angelides said Goldman’s conduct had been “deliberate and disruptive” -- which sounds a lot like a teacher describing a particularly bad student to the kid’s parents.

Some Wall Street veterans were stunned that Goldman would take the chance of aggravating the bipartisan FCIC, which, after all, is doing what Congress told it to do.

“I am hard pressed to name any management team that is more politically tone deaf than the group that was once thought of as a brain trust,” said Barry Ritholtz, head of investment research firm Fusion IQ and author of the book “Bailout Nation.”

Later Monday the FCIC released more details about what it specifically wanted from Goldman, and said it would now seek via subpoena. Two areas of focus, not surprisingly: Goldman’s “ABACUS” mortgage-bond transactions, which are at the heart of the Securities and Exchange Commission’s civil fraud suit against the firm; and pre-crisis transactions between Goldman and bailed-out insurance titan American International Group.

Read the three-page FCIC document here.

The FCIC included a chronology of recent communications between commission staff and Goldman. Here’s part of the timeline:

--- On May 19 commission staff communicated its continued frustration with the failure to produce specifically identified documents and the misleading nature of Goldman’s production thus far.

--- A phone call on May 19 resulted in an agreement for Goldman to produce targeted documents by the end of the day on Friday May 21. On May 20 the commission provided a spreadsheet to guide Goldman in providing the most pressing information.

--- On May 21 Goldman sent information that was supposed to meet the agreement reached on May 19, but failed to. On May 22 commission staff communicated the delivery did not meet the agreement, detailing how it did not, again making reference to possibility of subpoena.

--- On May 25 commission staff and Goldman had a phone conversation which resulted in Goldman’s promised delivery of the most pressing documents by the middle of the following week.

--- On June 3 commission staff sent Goldman’s lawyers an e-mail asking for a status update, since Goldman had promised it by mid-week. Commission staff did not receive a response. That night Goldman sent an incomplete production.

--- On June 4 the commission issued a subpoena to Goldman.

-- Tom Petruno

Photo: FCIC Chairman Phil Angelides, left, and Vice Chairman Bill Thomas. Credit: Mark Lennihan / Associated Press