During the first half of Tuesday’s Senate grilling of current and former Goldman Sachs employees, much of the heat was on Dan Sparks, the former mortgage desk chief 2006-2008, as well as Fabrice Tourre, the young trader charged in the SEC’s fraud case against the besieged Wall Street powerhouse. Early on the hearing got testy, even scatological, with Sen. Carl Levin (D-Mich.) pressing Sparks on an email he got in 2007 from a former executive at Goldman who called one particular deal “shitty.” Sen. Ted Kaufman (D-Del.) was aggressive in challenging the firm on why they sucked up so many loans for securitization that were mostly based on borrower’s stated income, a risk factor in the conveyor belt that, Kaufman stressed, the venerated investment bank must have seen as troubling if not possibly rife for fraud.
All of the members of the Goldman contingent, which also included Josh Birnbuam, former head of structured product trading and Michael Swenson, the current head of that group, were asked whether they felt they had a role in the financial crisis of 2008. Not surprisingly, there was some hedging.
Sparks: “Regret means there was something you feel like you did wrong. I don’t have that. We made mistakes, though, and we made poor business decisions in hindsight.”
Sparks: “Wrong to me means a qualitative judgment on something inappropriate. I think we made mistakes but we I do not think we did anything inappropriate.”
Tourre: “I am sad and humbled by what happened in the market in 2007 and 2008 and the whole financial crisisâ€¦. I firmly believe that my conduct was correct.”
Birnbaum: “We’re all sympathetic to the negative impact of that bubble. There’s a lot of pain and human suffering that came from the bursting of the bubble and to the extent that investment banks may have extended too much credit at a certain time, then it’s possible.”
Swenson: “I do not think that we did anything wrong. There’s things we wish we could have done better in hindsight, but at the times we made the decisions I don’t think we did anything wrong.”
Watch the hearings here.