Fabrice Tourre and his girlfriend talked like a couple very much in love.
They e-mailed back and forth about how they wanted to curl up in each other's arms and how they looked forward to tender moments together. Tourre, a Goldman Sachs bond trader, also wrote in the e-mails of the impending collapse of the subprime mortgage market and how he was masterminding ways at Goldman to make money from it.
Little did they know that three years later these very personal e-mails written through Tourre's Goldman Sachs e-mail account would become part of one of the biggest investigations into the subsequent financial crisis.
In the e-mail exchanges between Tourre and his girlfriend, Marine Serres, Tourre comes off as a young, hotshot trader who foresaw the subprime meltdown while still selling shoddy subprime-backed products so prolifically he could peddle them to "widows and orphans."
But Tourre — the only individual the Securities and Exchange Commission charged in its fraud case against the firm — also seems ethically conflicted.
"Anyway, not feeling too guilty about this, the real purpose of my job is to make capital markets more efficient and ultimately provide the U.S. consumer with more efficient ways to leverage and finance himself, so there is a humble, noble and ethical reason for my job ;) amazing how good I am in convincing myself !!!" Tourre said in an e-mail to Serres in January 2007.
That portion of the e-mail reflecting Tourre's conflicted views on his role in the subprime meltdown immediately followed another part of the e-mail that the SEC released in its complaint earlier this month.
The SEC's complaint only included Tourre referring to himself as "fabulous Fab" and talking about "standing in the middle of all these complex, highly leveraged, exotic trades he created without necessarily understanding all of the implications of those monstrosities!!!"
The SEC left out Tourre's ethical musings in its complaint.
Goldman Sachs released the Tourre e-mails over the weekend as it readies for its appearance before a Senate panel on Tuesday. Goldman Sachs Chief Executive Lloyd Blankfein and Tourre are scheduled to testify, along with other former and current executives.
The collection of e-mails also show that Tourre was not the only person at Goldman with confidence the subprime market was doomed.
Daniel Sparks, a former head of the mortgages department at Goldman, is also expected to testify on Tuesday before the Senate Permanent Subcommittee on Investigations.
"According to Sparks, that business is totally dead, and the poor little subprime borrowers will not last so long!!!" Tourre wrote in a March 7, 2007, e-mail to his girlfriend.
Tourre — who refers to Serres at one point as a "super-smart French girl in London" — also tells her about selling to unwitting investors the type of synthetic collateralized debt obligation, or CDO, at the center of the SEC case.
The SEC charges that Tourre and Goldman fraudulently marketed an "Abacus" CDO by hiding vital information from investors, including the role that hedge fund Paulson & Co played in picking mortgage products tied to the CDO. Paulson & Co bet against the CDO.
"Just made it to the country of your favorite clients!!! I'm managed (sic) to sell a few abacus bonds to widow and orphans that I ran into at the airport, apparently these Belgians adore synthetic abs cdo2," Tourre wrote in June 2007.
Earlier in 2007, in an e-mail to a friend, Tourre shares his fears that the product he helped create is crumbling — and he has a sense of humor about it.
"It's bizarre I have the sensation of coming each day to work and re-living the same agony — a little like a bad dream that repeats itself," Tourre writes. "In sum, I'm trading a product which a month ago was worth $100 and which today is only worth $93 and which on average is losing 25 cents a day ...That doesn't seem like a lot but when you take into account that we buy and sell these things that have nominal amounts that are worth billions, well it adds up to a lot of money."
He added, "When I think that I had some input into the creation of this product (which by the way is a product of pure intellectual masturbation, the type of thing which you invent telling yourself: "Well, what if we created a "thing", which has no purpose, which is absolutely conceptual and highly theoretical and which nobody knows how to price?") it sickens the heart to see it shot down in mid-flight... It's a little like Frankenstein turning against his own inventor ;)"
Tourre, 28 when he wrote the e-mails, reflects on the strangeness of being so young, yet being in such a critical role with pressures from those above him at the firm to make money.
"... I am now considered a 'dinosaur' in this business (at my firm the average longevity of an employee is about 2-3 years!!!) people ask me about career advice. I feel like I'm losing my mind and I'm only 28!!! OK, I've decided two more years of work and I'm retiring."