Lawmakers grill squirming bankers at Goldman Senate hearing

New York Stock Exchange draped in giant American flag

Goldman Sachs Senate hearings on Tuesday gave lawmakers the opportunity to grill Goldman Sachs execs about the firms role in the financial crisis. Flickr photo.

The Goldman Sachs Senate hearing opened Tuesday morning in New York as Goldman executives squirmed  under harsh questioning from lawmakers. The Goldman Senate hearing has been convened to grill seven current and former Goldman executives about possible Goldman Sachs fraud in last year’s financial meltdown. The infamous Goldman personalities set to appear include head honcho Lloyd Blankfien and Goldman Sachs fraud suspect “Fabulous” Fabrice Tourre.

Goldman Senate hearing zingers

The Goldman Senate hearing featured intense scolding from members of the Senate’s Permanent Subcommittee on Investigations. Notable comments from committee members reported by Frank Ahrens at the Washington Post include Sen. Claire McCaskill telling the group of Goldman Sachs execs “You are the bookie. You are the house. You had less oversight than a pit boss in Las Vegas.” McCaskill was talking about Goldman’s role in creating a 2007 investment seeking quick cash by betting against a synthetic collateralized debt obligation (CDO) that was designed to fail. Later referring to Goldman’s fee for setting up the bets, she asked them “What’s your vig?” “Vig,” short for vigorish, is a word used to describe the extra cash collected by a bookie for placing bets.

The Goldman Senate hearing was preceded on Monday by the release of incriminating documents by Sen. Carl Levin, D-Mich., who chairs the committee. CNN reports that the documents suggest that Goldman Sachs bet far more aggressively against the nation’s housing market and its own customers than originally believed, collecting a pay day of as much as $3.7 billion in the process.

Goldman Sachs fraud denied

The Goldman Senate hearing is the latest chapter in a drama that began with the sub-prime mortgage crisis, continued with the Securities and Exchange Commission accusing Goldman Sachs of fraud, and continuing with the release of incriminating e-mails from Goldman bond trader “Fabulous” Fabrice Tourre. said that testimony prepared for Blankfein’s appearance before the committee today denies Goldman Sachs fraud with claims that the CDO may look bad, but it isn’t fraud. Blankfein says that CDOs are too complicated for most people to understand, therefore the impression is that they are purposely created to confuse investors.

Tourre appears at Goldman Senate hearing

The Goldman Senate hearing was the first opportunity for “Fabulous” Fabrice Tourre to publicly defend himself after being named as the focus of the SEC investigation into Goldman Sachs fraud. He denied the charges and said he would fight them. But he expressed regret that he wrote e-mails to his girlfriend in which he bragged about spinning an unsustainable web of risk to investors.