As Goldman stock probes new lows every day, and in passing news has just announced it would sell its largely irrelevant Litton Loan mortgage servicing unit to Ocwen financial (which was named so after the founders could not come up with a name so they inverted Newco, but that is a story for another day) for $264 million but retain any potential fraud liability, the firm is now expected to release its own trove of documents expected to “defend” the firm from the various allegations presented in the Carl Levin 639 page report. The report has already served as the basis for a subpoena lobbed at Goldman, and which some predict will have a much lower threshold of proving guilt courtesy of New York’s “Martin Act” has pushed the stock to a one year low. It was only inevitable that Goldman would come up with some jiggering of its numbers to prove that it was in fact innocent. We wonder if the report will also provide an explanation for the following words by one Deeb Salem, a Goldman trader in the structure products group: “We began to encourage this squeeze, with plans of getting very short again.” Swenson, Salem’s supervisor, sent e-mails in May 2007 urging traders to offer prices that will “cause maximum pain” and “have people totally demoralized.” In interviews with the committee, Salem and Swenson denied attempting a short squeeze, the report said.” Regardless, we can’t wait to see the latest attempt to obfuscate the public opinion with the mixing of apples and oranges. Alas, Goldman may be surprised to find that the general population is not quite as dumb as it expects this time around, and there will be those who will gladly cut through the fluff of any posted rebuke within minutes.
From the WSJ:
Goldman is now considering releasing documents about its mortgage bets that are aimed at showing what the securities firm’s officials claim is sloppy math and incomplete analysis by the subcommittee as the panel sifted through tens of millions of documents turned over by Goldman.
The information might be released soon on Goldman’s website, though a decision hasn’t been made yet. Even if the documents aren’t made public, they could be used by Goldman to defend itself in ongoing investigations that appear to be linked to the Senate subcommittee’s report.
A subcommittee spokeswoman declined to comment.
One of the most dramatic documents released by the panel is a chart showing the size of Goldman’s overall long or short bets on the housing market. While those bets varied from day to day, the Senate subcommittee said Goldman had net short positions of $10.6 billion on Feb. 26, 2007, and $13.9 billion on June 25, 2007. The June 25 position was the company’s biggest bet against the housing market, according to the Senate subcommittee.
Goldman now plans to contend that both figures are wildly inaccurate, claiming Senate investigators overlooked or ignored bullish mortgage trades held by the securities firm, these people said.Zero Hedge, for one, can hardly wait for the release of these documents…
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