Goldman's Fabrice Tourre to face lawmakers

By Ben Rooney, staff reporter


NEW YORK (CNNMoney.com) -- 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

Just the hot list include
Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 30,303.17 -633.87 -2.05%
Nasdaq 13,270.60 -355.47 -2.61%
S&P 500 3,750.77 -98.85 -2.57%
Treasuries 1.01 -0.03 -2.50%
Data as of 9:21pm ET
Company Price Change % Change
Ford Motor Co 8.29 0.05 0.61%
Advanced Micro Devic... 54.59 0.70 1.30%
Cisco Systems Inc 47.49 -2.44 -4.89%
General Electric Co 13.00 -0.16 -1.22%
Kraft Heinz Co 27.84 -2.20 -7.32%
Data as of 2:44pm ET
Sponsors

Sections

Bankrupt toy retailer tells bankruptcy court it is looking at possibly reviving the Toys 'R' Us and Babies 'R' Us brands. More

Land O'Lakes CEO Beth Ford charts her career path, from her first job to becoming the first openly gay CEO at a Fortune 500 company in an interview with CNN's Boss Files. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.