Senior officials from the investment bank Goldman Sachs have been defending themselves against a welter of accusations levelled by a Senate committee hearing.
Senators vilified the bankers for allegedly being instrumental in pumping up the housing bubble that led to the financial crisis, and then profiting from its collapse in 2007 by betting on its demise.
US Democrat Senator Carl Levin told: “While the banker may make mistakes, he must never make the mistakes of offering investments to his clients which he does not believe to be good.”
His Democrat colleague, Senator Clare McCaskill added: “It’s not investment in a business that has a good idea, it’s gambling, pure and simple, raw gambling.”
Goldman Sachs bond-trader Fabrice Tourre has been charged with fraud, for allegedly with-holding crucial information about complex financial instruments he had helped design.
He told the committee: “I was an intermediary between highly sophisticated professional investors, all of which were institutions. None of my clients were individual retail investors. The structured products on which I worked filled an important need for these sophisticated financial institutions.”
Goldman said it did not have prior knowledge about the fate of the housing market, and in selling off toxic assets it was simply managing its risk.