Goldman's Fabrice Tourre to face lawmakers

By Ben Rooney, staff reporter

NEW YORK ( -- The self-proclaimed "fabulous" Fabrice Tourre, the Goldman Sachs executive charged with fraud, and the investment bank's chief executive, Lloyd Blankfein, will both testify before a Senate panel next week.

The permanent subcommittee on investigations, part of the Senate committee on homeland security and governmental affairs, announced Tuesday that it will convene a hearing on April 27 to explore the role investment banks played in the 2008 financial meltdown.

The hearing will feature testimony from seven Goldman Sachs (GS, Fortune 500) employees, but Tourre is the only one directly implicated in the fraud charges brought last week by the Securities and Exchange Commission.

In its civil complaint, the SEC charged Goldman and Tourre, now an executive director in the bank's London branch, for failing to disclose conflicts in a 2007 sale of a so-called collateralized debt obligation (CDO).

According to the SEC, Tourre was the Goldman employee "principally responsible for the structuring and marketing" the CDO, known as Abacus 2007-ACl, during the relevant period.

The SEC alleges that Goldman allowed Paulson & Co., a New York-based hedge fund, to help select securities in the CDO, without telling other investors that Paulson was beting the CDO's value would decline.

When the value of the CDO plunged shortly after it was issued, Paulson walked away with $1 billion, while investors lost the same amount, the SEC said.

The SEC released excerpts from e-mails that Tourre, 31, sent to a friend in January 2007, around the time the CDO was being marketed to investors, which will probably come up during the hearing.

"More and more leverage in the system," Tourre wrote. "The whole building is about to collapse anytime now...Only potential survivor, the fabulous Fab[rice Tourre] ... standing in the middle of all these complex, highly leveraged, exotic trades he created without necessarily understanding all of the implications of those monstruosities!!!"

Similarly, an e-mail sent the following month to Tourre from the head of the Goldman's structured product correlation trading desk stated in part: "the cdo biz is dead we don't have a lot of time left."  To top of page

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