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 âone shi**y deal,â 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 âmanyâ cases, the panel said.
âBoy that timberwo[l]f was one shi**y deal,â Montag, who is now Bank of America Corp.âs president of global banking and markets, said in a June 22, 2007, e-mail to Daniel Sparks, who ran Goldman Sachsâs mortgage business at the time, according to the panelâs statement. Within five months of Timberwolfâs 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.
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The committee, which began to release documents before tomorrowâs hearing, didnât 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, didnât 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 didnât 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
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 âmanyâ cases, the panel said.
âBoy that timberwo[l]f was one shi**y deal,â Montag, who is now Bank of America Corp.âs president of global banking and markets, said in a June 22, 2007, e-mail to Daniel Sparks, who ran Goldman Sachsâs mortgage business at the time, according to the panelâs statement. Within five months of Timberwolfâs 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 tomorrowâs hearing, didnât 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, didnât 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 didnât 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
