Levin Grills Blankfein in Clash of Harvard Law Standouts
Lloyd C. Blankfein and Carl Levin both have degrees from Harvard Law School. Judging from their confrontation on Capitol Hill yesterday, they hardly speak the same language.
Levin, chairman of the Senate’s Permanent Subcommittee on Investigations, pummeled Blankfein, chairman and chief executive officer of Goldman Sachs Group Inc., with a barrage of questions about why the Wall Street firm sold securities it was betting against. Blankfein struggled to complete sentences as he tried to describe what it means to be a market-maker.
“Levin had a simple narrative to tell: Goldman bet against their clients,” said Jonathan Taplin, a professor of communication at the University of Southern California’s Annenberg School in Los Angeles. “Blankfein had these long complicated explanations, but I’m not sure the average person listens or cares about that.”
The clash of the two chairmen came toward the end of more than 10 hours of public hearings looking into Goldman Sachs’s role in the financial crisis. At times, it seemed like a mismatch. Levin, 75, a Michigan Democrat, frequently interrupted Blankfein, 55, who runs Wall Street’s most profitable bank.
“Your people think it’s a piece of crap and go out and sell it,” said Levin, his reading glasses pushed to the tip of his nose, referring to Goldman Sachs e-mails in which traders spoke of selling securities to customers. “We’re talking about betting against the very thing that you’re selling, without disclosing that to your client.”
Blankfein, often squinting, talked about providing “liquidity” and using “instruments” that give customers “the risk they want.” Levin just returned to his theme.
“What do you think about your own people selling securities they think are crap?” the senator asked.
Both Levin, who grew up in Detroit, and Blankfein, the son of a postal worker raised in Brooklyn, went to public schools before attending elite colleges. Levin graduated from Swarthmore College in Pennsylvania, and Blankfein from Harvard College in Cambridge, Massachusetts. Both attended Harvard Law School, Levin graduating in 1959 and Blankfein in 1978.
Blankfein practiced tax law before joining the commodities firm J. Aron & Co., later acquired by Goldman Sachs. He became CEO in 2006. Last year he received a salary of $600,000 and a bonus in stock of $9 million.
Levin worked as an assistant attorney general in Michigan and general counsel for the Michigan Civil Rights Commission before being elected to the Detroit City Council and then winning a seat in the Senate in 1978. He is chairman of the Armed Services Committee as well as the investigations subcommittee and has led probes into unfair credit card practices, money laundering and the collapse of Enron Corp. Last year he made $174,000.
The two men have risen to the heights of professions that are held in low regard. Viewers tended to see what they wanted to in the hearing because of cynicism both about Wall Street and Washington, said Victor Hwang, managing director of T2 Venture Capital in Los Altos Hills, California.
“It’s a Rorschach test for people,” Hwang said. “Was the financial crisis caused by a failure of the markets or by the failure of government? I am of the belief that the markets utterly failed and that government failed to exercise good oversight. Levin is more credible, but only because Goldman Sachs is near zero right now.”
Donna Grimme, president of H & N Plumbing and Heating in Prairie du Chien, Wisconsin, saw the confrontation another way.
“I blame the politicians more than Goldman Sachs or Blankfein,” said Grimme. “Goldman and Blankfein have more credibility than a senator. The politicians want to get more involved. If the government would stay out of financial markets and let things fall where they may, we’d be better off.”
Robert Collet, a real estate broker in Downey, California, said he lost an investment in a condominium that was foreclosed and that his home equity of about $180,000 had been wiped out. He said he believed many politicians were being hypocritical because they had accepted contributions from Goldman Sachs and other financial firms. Still, he said people needed to be protected against aggressive bankers.
“I’ll take Levin over Blankfein any day,” said Collet. “I just feel they want it all. If they have 90 percent of something, they’re thinking about how to get the other 10 percent. We need government to protect us from that.”
As Levin’s questioning of Blankfein dragged on into the evening, he lectured Blankfein about the ethics of his business.
“You shouldn’t be selling junk,” Levin said. “You shouldn’t be selling crap. You shouldn’t be betting against your own customers.”
To contact the reporter on this story: James Sterngold in New York at email@example.com
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