Goldman Sachs CDO Labeled ‘Shi**y Deal’ by Montag (in emails)

[girl gone mad]

April 26 (Bloomberg) -- Thomas Montag, the former head of sales and trading in the Americas at Goldman Sachs Group Inc., called a set of mortgage-linked investments sold by his firm “one shi**y deal,” according to an excerpt from internal e- mails released today by Senate lawmakers.

The transaction was Timberwolf Ltd., a $1 billion collateralized debt obligation holding pieces of other CDOs, according to a statement today from the Permanent Subcommittee on Investigations. The CDO also included optimistic side-bets on the performance of CDOs, or derivatives, in which the firm took the opposite pessimistic side in “many” cases, the panel said.

“Boy that timberwof was one shi**y deal,” Montag, who is now Bank of America Corp.’s president of global banking and markets, said in a June 22, 2007, e-mail to Daniel Sparks, who ran Goldman Sachs’s mortgage business at the time, according to the panel’s statement. Within five months of Timberwolf’s debut, the CDO had lost 80 percent of its value, and it was liquidated in 2008, according to the panel.

The CDO was among securities that Goldman Sachs sold to clients after deciding the New York-based firm needed to reduce its mortgage holdings, Carl Levin, a Michigan Democrat who leads the panel, said in the statement. Chief Executive Officer Lloyd Blankfein and six other current and former executives will testify tomorrow in front of the panel about practices in mortgage securities markets before they collapsed.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aDYd47MITKvE&pos=1

[dkf]

1. Could I be more disgusted?

Looks like I can.

The lack of any conscience whatsoever is appalling. Yet some traders and Professionals think this is perfectly fine. It seems this is a good test of ethics. It should be a no brainer but amazingly gs actually has supporters. Sick.

[Celebration]

2. I've been watching the hearings

It's absolutely certain that the model of representing both sides of a transaction, as a "market maker", is completely broken. That has to stop. There is tremendous conflict of interest in this model.