Goldman Sachs Group Inc. was subpoenaed by the Financial Crisis Inquiry Commission after panel members said the most profitable firm in Wall Street history engaged in a document “dump” to hinder a probe.
Goldman Sachs sent more than a billion pages of documents, FCIC Vice Chairman Bill Thomas said on a conference call with reporters today. Not all of the information is what the panel requested, and Goldman Sachs didn’t cooperate with requests to interview Chief Executive Officer Lloyd Blankfein, Chief Operating Officer Gary Cohn and Chief Financial Officer David Viniar, FCIC Chairman Phil Angelides said.
“We did not ask them to pull up a dump truck to our offices and dump a bunch of rubbish,” said Angelides, 56, who previously served as California’s treasurer. “This has been a very deliberate effort over time to run out the clock.”
The FCIC, which Congress appointed last year to investigate the causes of the worst economic slump since the Great Depression, issued the subpoena June 4. The request adds to government scrutiny of New York-based Goldman Sachs, as regulators and lawmakers examine how it packaged mortgages into securities that fueled investor losses when the housing market collapsed in 2007.
“We have been and continue to be committed to providing the FCIC with the information they have requested,” Goldman Sachs spokesman Michael DuVally said in an e-mailed statement.
Goldman Sachs fell $3.57, or 2.5 percent, to $138.68 at 4 p.m. in New York Stock Exchange composite trading.
Thomas said the panel’s requests to Goldman Sachs go back “several months.” Information the firm turned over didn’t comply with what was asked for and has put FCIC investigators in the position of “searching through the haystack for the needle,” he said.
“We expect them to provide us with the needle,” he said.
Goldman Sachs agreed to schedule interviews with Blankfein, 55, and other executives after the FCIC issued the subpoena, Angelides said.
The FCIC wants details on sales of collateralized debt obligations, assistance in determining the names of Goldman Sachs clients and a list of documents the firm provided to the Senate Permanent Subcommittee on Investigations, according to a statement posted on the panel’s website today. Senators grilled current and former Goldman Sachs executives in April.
FCIC staff also sought an interview with the employee most knowledgeable about a series of CDOs named Abacus, one of which triggered a Securities and Exchange Commission lawsuit against the firm.
The SEC, in an April 16 complaint, said Goldman Sachs sold a CDO tied to mortgages without disclosing that hedge fund Paulson & Co. helped pick the underlying securities. Paulson was betting the CDO would fail, the SEC said. CDOs are securities made up of bonds backed by corporate or consumer debt.
Goldman Sachs has said the SEC suit is “unfounded in law and fact.” Paulson wasn’t accused of wrongdoing.
Federal prosecutors in New York have initiated their own investigation of Goldman Sachs to determine whether to bring charges, people familiar with the matter said April 29. The company hasn’t been accused of criminal misconduct.
FCIC investigators sought to question the Goldman Sachs employee most knowledgeable about derivative transactions with American International Group Inc. AIG, once the world’s biggest insurer, collapsed in 2008 after it couldn’t meet collateral demands on credit-default swaps deals with banks. A $182.3 billion taxpayer bailout of AIG ensured that Goldman Sachs and other banks were repaid in full.
Attempts to get information from Goldman Sachs date back to at least January, according to the FCIC’s statement. While the firm provided documents in March and May, the responses were insufficient. The subpoena followed after another “incomplete production” on June 3 of what panel’s staff considered “the most pressing documents,” the FCIC said.
The FCIC has until December to complete the probe of Goldman Sachs and other companies and report findings to Congress.
Buffett, the world’s third richest man, testified last week with Moody’s executives at an FCIC hearing in New York. Moody’s and other credit-rating firms have been blamed by investors and lawmakers for helping trigger the financial crisis by assigning top grades to mortgage bonds that later plunged in value.
The FCIC subpoenaed Buffett, whose Berkshire Hathaway is Moody’s largest shareholder, after he turned down an invitation to testify. The panel said it had subpoenaed New York-based Moody’s in April because the company hadn’t turned over requested information quickly enough.