Nightly News   |  April 27, 2010

Goldman Sachs gets grilled

At Goldman Sachs' hearing on Capitol Hill Tuesday, three current and former members of the company's mortgage trading operation faced withering questions from Senators on both sides of the aisle. NBC's Lisa Myers reports.

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This content comes from a Full-Text Transcript of the program.

WILLIAMS: Good evening.

BRIAN WILLIAMS, anchor: As the CEO himself said today, before this most Americans really didn't know what Goldman Sachs was, what kind of bank it was or what it did. Today on Capitol Hill in Washington , Goldman Sachs became the villain . The hearing had

it all: outright dripping contempt, condescension, arrogance, profanity, stonewalling, even a suspension of bathroom privileges for four witnesses who were forced to stay in their chairs for hours. Masters of the universe who many people blamed for fueling the economic collapse being questioned by senators who are hardly blameless themselves. We have all of it covered tonight, beginning with NBC 's Lisa Myers in our Washington newsroom. Lisa , good evening.

LISA MYERS reporting: Good evening, Brian . This went well beyond a public flogging. For eight hours, seven current and former Goldman executives were pilloried by members of both parties with the company's own internal documents and e-mails. The 18-month Senate investigation found that Goldman bet against its own clients and profited as the housing market collapsed.

Senator CARL LEVIN: Do you swear that the testimony you're about to give...

MYERS: The tone for the day was set in the opening moments as Chairman Carl Levin sparred with Daniel Sparks , who used to head Goldman 's mortgage department.

Sen. LEVIN: Answer my question.

Mr. DANIEL SPARKS: Again...

Sen. LEVIN: No, no. Answer my question.

Mr. SPARKS: I'm just trying to understand exactly what the question is.

Sen. LEVIN: The question is very clear.

MYERS: Senator Susan Collins took over.

Senator SUSAN COLLINS: I'm starting to share the chairman's frustration already, and I'm only 30 seconds into my time.

MYERS: She kept pressing on a simple but important question.

Sen. COLLINS: Could you give me a yes or no to whether or not you considered yourself to have a duty to act in the best interests of your clients?

Mr. SPARKS: I believe that we have a duty to serve our clients well.

MYERS: That drew scattered boos and groans in the room. Then another Goldman exec came to the rescue.

Mr. JOSHUA BIRNBAUM (Former Goldman Sachs Managing Director): Not only do I believe that we do, I believe that we did.

MYERS: But a series of internal company e-mails revealed Goldman executives expressed negative opinions about or even were betting against subprime mortgage deals while aggressively selling them to clients. In this e-mail, a Goldman executive comments about a deal called " Timberwof ." "Boy, that Timberwof was one" -- expletive deleted -- "deal."

Sen. LEVIN: Look what your sales team was saying about Timberwof . "Boy, that Timberwof was one......deal."

Mr. SPARKS: Some context...

Sen. LEVIN: Yeah.

Mr. SPARKS: ...might be helpful.

Sen. LEVIN: The context -- let me tell you, the context is mighty clear. June 22 is the date of this e-mail. "Boy, that Timberwof was one......deal." How much of that......deal did you sell to your clients after June 22, 2007 ?

Mr. SPARKS: Mr. Chairman, I don't know the answer to that, but the price would have reflected levels that they wanted to invest at the time.

Sen. LEVIN: Oh, of course, but they don't know it's -- you didn't tell them you thought it was a......deal.

MYERS: Goldman 's chief financial officer was asked what he feels when he hears of an e-mail like that.

Mr. DAVID VINIAR (Goldman Sachs Chief Financial Officer): I think that's very unfortunate to have on e-mail.

Sen. LEVIN: Are you embar...

Mr. VINIAR: And very unfortunate -- I don't...

Sen. LEVIN: On e-mail?

Mr. VINIAR: Please don't take that the wrong way.

Sen. LEVIN: How about feeling that way?

Mr. VINIAR: I think it's very unfortunate for anyone to have said that in any form.

MYERS: Senator Claire McCaskill taunted the executives, saying Goldman was running what amounted to a fixed gambling enterprise.

Senator CLAIRE McCASKILL: You are the bookie. You are the house. You think it's so complicated and you think you're so smart? Any street gambler would never place a bet with a bookie or a house with the record that is revealed in the documents that this committee has gathered.

MYERS: Some of the executives expressed sympathy for Americans who lost jobs and their savings because of the meltdown, but no one seemed to think Goldman deserved any blame.

Senator JON TESTER (Democrat, Montana): Do you think that Goldman Sachs did anything wrong in this whole process of these synthetic CDOs ?

Mr. SPARKS: Wrong to me has some qualitative comment about doing something inappropriate. That doesn't mean we didn't make mistakes or do deals that didn't turn out the way we had hoped they would.

Senator TED KAUFMAN (Democrat, Delaware): Two things I'm getting out of these hearings. Number one, nobody did anything wrong. This was a natural disaster like a hurricane hit. And the second thing is that these things were just something that happened.

MYERS: The young trader Fabrice Tourre , who, along with the firm, was charged with fraud by the SEC , emphatically denied wrongdoing.

Mr. FABRICE TOURRE: I deny categorically the SEC 's allegations, and I will defend myself in court against this false claim.

MYERS: Senators noted that the executives had reason for caution, that they'd been heavily prepped by their lawyers and knew their words could later be used against them in legal proceedings .

Offscreen Voice #1: How do you feel about destroying the American economy ?

MYERS: Tourre and other executives were taunted after they left the hearing room.

Offscreen Voice #2: You have no ethics and you have no shame.

MYERS: At the end of the day , CEO Lloyd Blankfein strongly defended his firm, but promised some changes.

Mr. LLOYD BLANKFEIN: We have to do a better job of striking the balance between what an informed client believes is important to his or her investing goals and what the public believes is overly complex and risky.

MYERS: While Goldman was taking a beating today, Brian , experts note that Congress also played an important role in the financial meltdown. It repealed financial safeguards enacted after the Great Depression and it neglected to regulate some of the highly leveraged deals that brought the economy to the

brink of collapse. Brian: Lisa Myers in our Washington newsroom starting us off tonight. Lisa , thanks.

WILLIAMS: