Goldman trader: 'The only potential survivor'

NEW YORK (CNNMoney.com) -- The e-mail messages Fabrice Tourre sent to a girlfriend in late 2007 make it clear that the glib and sometimes arrogant 28-year-old trader was fully aware that the financial "monstruosities" he helped create at Goldman Sachs were entirely bunk.

But the highly personal messages, written in confidence and released over the weekend by Goldman, also suggest that Tourre had some misgivings about the toxic trades he engineered over two years ago, which are now the subject of fraud charges brought by the Securities and Exchange Commission.

In an e-mail dated Jan. 23, 2007, Tourre described himself as "the only potential survivor" of a collapsing market for complex deals based on mortgage-backed securities. As the only Goldman employee named in the SEC's complaint, Tourre appears to have been wrong on that point.

Tourre, now a 31-year old director in the bank's London office, and seven other Goldman employees, including chief executive Lloyd Blankfein, will testify before the Senate Homeland Security Committee's subcommittee on investigations Tuesday. The hearing is aimed at exploring the role investment banks played in the 2008 financial crisis.

Goldman issued the Tourre e-mails in response to the release of four documents by the committee. Panel chairman Sen. Carl Levin, D-Mich., said the Goldman documents show the firm was conscious of profits it was making on the decline of the housing market.

A Goldman spokesman said the Senate panel "cherry-picked" the documents it released to show the firm in a bad light.

The e-mails, which make liberal use of exclamation points and contain more than a few emoticons, illustrate both Tourre's cavalier attitude and the doubts he harbored about the CDO business.

In one e-mail, Tourre boldly acknowledged that he didn't necessarily understand "all the implications" of the complicated and highly leveraged bets he was placing, adding that he was, in a twisted bit of logic, working on behalf of American consumers.

"Anyway, not feeling too guilty about this, the real purpose of my job is to make capital markets more efficient and ultimately provide the U.S. consumer with more efficient ways to leverage and finance himself, so there is a humble, noble and ethical reason for my job ;)" Tourre wrote.

However, in a nod to how perverse this argument is, Tourre adds "amazing how good I am in convincing myself."

Tourre refers to himself in one e-mail as "fabulous Fab" -- a nickname he says another Goldman employee gave him. In what is perhaps a false attempt at modesty, he says: "There is nothing fabulous abt (about) me, just kindness, altruism..."

In another e-mail from June 2007, Tourre joked about a trip he took to Belgium to sell portions of Abacus 2007, which is the collateralized debt obligation (CDO) identified in the SEC's fraud case.

"I managed to sell a few abacus bonds to widows and orphans that I ran into at the airport, apparently these Belgians adore synthetic abs cdo2," Tourre said.

In an even more blunt description, Tourre calls the CDOs he produced "intellectual masturbation" and likens himself to Dr. Frankenstein.

"When I think that I had some input into the creation of this product (which by the way is a product of pure intellectual masturbation, the type of thing which you invent telling yourself: 'well, what if we created a 'thing', which has no purpose, which is absolutely conceptual and highly theoretical and which nobody knows how to price?") it sickens the heart to see it shot down in mid-flight...It's a little like Frankenstein turning against his own inventor ;)"

Writing in both of French and English, Tourre mixes terms of endearment for his girlfriend with commentary on the decline of the housing market.

"Et les pauvres petits subprime borrowers vont pas faire de vieux os!!!" he writes, which translates roughly to the poor little subprime borrowers will not last long.

Meanwhile, Goldman Sachs has vigorously denied any wrongdoing, calling the SEC's charges "unfounded in law and fact." In a voice-mail message sent last week, Blankfein assured Goldman employees he is taking "appropriate steps to defend the firm and its reputation."

The SEC alleges that Goldman allowed a New York-based hedge fund, Paulson & Co., to pick securities in the Abacus CDO, without telling other investors that Paulson was shorting the deal, or betting the value of the CDO would fall.

When the CDO's value plunged shortly after it was issued, Paulson took home a $1 billion profit, while investors lost the same amount, according to the SEC.