Goldman Sachs E-Mail by Montag Described CDO as ‘Shi**y Deal’

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 timberwo[l]f 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.

Truncated Text

The committee, which began to release documents before tomorrow’s hearing, didn’t release the full text of the e-mails. A person briefed on the Timberwolf e-mail confirmed that Montag was the author.

Montag, now 53, didn’t respond to a request for comment and Bank of America spokeswoman Jessica Oppenheim had no immediate comment. Blankfein, 55, will tell the panel his firm didn’t wager against clients, according to a prepared text of his remarks.

The CDO was issued in March 2007, following a Goldman Sachs quarter that ended February 2007 in which one department of the bank shifted $6 billion of bets that mortgage bonds would perform to $10 billion they would default, according to Bloomberg data and information the panel released.

Bear Stearns Asset Management, the manager of two hedge funds overseen by Ralph Cioffi whose collapse in June 2007 roiled global markets, was among the buyers, purchasing about $300 million, according to the committee.

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

 

GS sent 20 million documents to Levin. Booyah!

 

Always with the emails, they should ban emails. I bet there is much worse somewhere. Ones just flat out laughing at people, and the ones which will burn them, laughing before the deal is closed.

 

Not sure but I think there was a special law passed regarding company e mails, you have to save them forever.

 

I have a question, how is that the government always have access to people's emails like this?

 

Because they request them and the firms send them. They cannot avoid this because the "requests" are usually are in the form of subpoena and they have a whole bunch of white shoe law firms tripping all over themselves to get this kind of business. Easy money for lawyers and usually a gigantic fishing expedition by the govt which usually pulls only a few tidbits like this one. There are laws that financial firms must save emails/im/chat/voice records for a certain period of time too so by law they must have this type of information available if asked or face sanctions.

 

By getting a court order and searching through email records.

 

But where are those records, they seized GS email servers?

 

I think he's actually baiting for a "big brother is obviously keeping records of every email ever in a secret bunker at area 51 to track and eventually round up dissidents to be placed in internment camps" response.

 

GS turns over a copy of the email messages after being served with a court order.

I don't believe that is true.