Sen. Levin Releases Damning Goldman Emails Before Tuesday Hearing

April 25, 2010 (LPAC)—In advance of his Tuesday, April 27 hearing where he will grill Goldman "Sucks" CEO Lloyd Blankfein and other officers, Sen. Carl Levin (D-Mich.) released four internal Goldman emails Saturday morning, in which Blankfein and others preen themselves on making piles of money by shorting the housing market, including deals which Goldman itself had set up, as in the case featured in the SEC lawsuit against Goldman of April 16.

Levin's own summary, as follows.

"In one of the e-mails released today, Mr. Blankfein stated that the firm came out ahead in the mortgage crisis by taking short positions. In an e-mail exchange with other top Goldman Sachs executives, Mr. Blankfein wrote: 'Of course we didn't dodge the mortgage mess. We lost money, then made more than we lost because of shorts.'

"In a second e-mail, Goldman Sachs Chief Financial Officer David Viniar, who also will testify on Tuesday, responded to a report on the firm's trading activities, showing that - in one day - the firm netted over $50 million by taking short positions that increased in value as the mortgage market cratered. Mr. Viniar wrote: 'Tells you what might be happening to people who don't have the big short.' Levin said: 'There it is, in their own words: Goldman Sachs taking the big short against the mortgage market.'

"In a third e-mail, Goldman employees discussed the ups and downs of securities that were underwritten and sold by Goldman and tied to mortgages issued by Washington Mutual Bank's subprime lender, Long Beach Mortgage Company. Reporting the 'wipeout' of one Long Beach security and the 'imminent' collapse of another as 'bad news' that would cost the firm $2.5 million, a Goldman Sachs employee then reported the 'good news' - that the failure would bring the firm $5 million from a bet it had placed against the very securities it had assembled and sold.

"In a fourth e-mail, a Goldman Sachs manager reacted to news that the credit rating agencies had downgraded $32 billion in mortgage related securities - causing losses for many investors - by noting that Goldman had bet against them: 'Sounds like we will make some serious money.' His colleague responded: 'Yes we are well positioned.'"

Concerning Tuesday's hearing, finance professor and Wall Street historian Charles Geisst was quoted saying: "This is Pecora II. They have to squirm and they have to answer the questions."