charges against goldman sachs. scott? >> well, trish, goldman sachs was founded in 1869, a bastion of the financial world, and we can take a look at the headquarters in lower manhattan of a company now under fire, often a lightning rod and never more so than today. the securities and exchange commission filing civil fraud charges against goldman sachs as well as one of its vice presidents involving mortgage-backed securities. the s.e.c. says that goldman structured a portfolio of what turned out the to be toxic mortgages hand picked by a hedge fund manager run by john paulson. and the s.e.c. says that goldman did not disclose that paulson not only had picked the mortgages, but that he was betting against those mortgages in 2007 as the housing market was about to come undone. goldman sachs today says it will vigorously fight the charges and work to restore its reputation, a reputation that today is very much under fire. here is the s.e.c. chief of enforcement speaking today in new orleans. >> there is a fundamental differe

will those goldman scandal or this goldman scand

i think goldman probably has a pretty strong -- >> it's not a criminal case against goldman. it's a civil case. so again, it's about looking for punitive damages. it's about, first of all, giving the people that suffered something. and again, it's about paving the road for payback to the broad society that is supposedly wall street. >> let's move on to the second derivative trades right now. we saw a lot of financial-related stories moving lower in today's session. moody's, for one, traded lower. we also saw spikes in some bond insurers like mbia hitting a fresh 52-week high. brian kelly, you're at the prop desk. you're actually shorting mco, weren't you? >> yeah, absolutely. i don't think this is -- this is the first case. it's not the best case. i think there's more to this. and gary even actually alluded to it, that there is going to be more out there. it doesn't just start with one. i also think what's interesting, and there's going to be a bunch of lawyers over in europe this weekend that are salivating over those goldman sachs swaps deals. so i think you've got this sit

and for the record, do you own goldman shares yourself? no, i do not own goldman shares. but i will tell you this, that if goldman got into the 135, 140, i would certainly be looking at maybe six months, nine month out options. call options. i would be looking for it buy down in there. ok, well let's talk about overall financial sector. since the sec may be looking at other banks. do you short financials now, or do you still buy them? no, i like financials. i think like bank america, i still like bankamerica. but, bankamerica up at 19 and the whole financial. if you look at the xl f, just as an index or an exchange traded fund. you see the percentage gain that we've seen this year alone. i think we got way to far ahead of ourselves. the market is going to struggle, banks will struggle throughout 2010 and probably for the first half of 2011. but i don't think you do not want to not have exposure. i think you want to have exposure. looking at citi for example, we hit $5, we tapped off of that. we lost 10%, we've rallied back, on good news on earnings from citi. i think a lo

action within goldman. i think it's odd they just listed one person fairly far down in the pecking order. it's goldman sachs and mr. tourre, as if there's no one in between. >> i can tell you based on my experience at the s.e.c. when we worked on matters of significant size, we tended to coordinate or investigation alongside the fbi, and also in this case i would imagine the new york state attorney general, connecticut, their attorney general verbalize that they're looking into this. they want to understand whether it was tied to just goldman. with regard to fabrice, assuming he was guilty, it's hard to believe he acted alone. >> if it's true that he represented that -- this guy is going to jail, i don't know about that, and i've heard conflicting opinions. >> goldman i don't believe believes he misrepresented things. otherwise he would have been fired. >> i think they'll put a lot of pressure on him, the s.e.c. and possibly the justice department. it's amazing the kind of pressure they can put on somebody

goldman deere, goldman cat. best of all, ford, a company on a major roll. some of it almost repealed in the wake of the goldman negativity. you know how i feel about ford and its ceo alan mulally. i think ford's heading higher. i think it can see 17 rather rapidly after it reports, courtesy of bond rating upgrades and number bumps. you've just got a nice discount for no real reason. i'd consider buying some of the retailers and retail derivative plays like hot topic. my dad called me yesterday, said i never looked so good. hey, dad, that was a wig. i know you know that. or scott's miracle-gro smg. i've been trying to figure out how they could come down so you could get into some of them so cheap. then goldman happens. same with home depot which i own for my charitable trust. i've been itching to get more of that one. and don't forget online retail king amazon, down 3% today, which reports next thursday. down 3%. might be like boeing, though. amazon could be a chance to buy some, and then buy more of it. if anyone thinks the future of amazon's getting darker

complaint against goldman sachs. he will be joined by david vinier, of course, goldman sachs' chief financial officer who typically runs the earnings conference call. this will be at 8:00. something else worth noting as well, members of the public are invited to listen to the conference call, given the number to do so. and they have scheduled it for 8:00 a.m. typically, of course, vinier has a conference call, not the entire public is always invited, although basically, you can. if you want to get on, you can get on. but goldman sachs coming out and saying they will now hold the call at 8:00 a.m. the call will be open to the public at large. in fact, they're almost inviting the public to join the call. and it will include the company's co-general counsel. interesting to note, goldman's shares did come back a bit, i think, once this release was put out there. the company fighting hard. and apparently caught unawares by the s.e.c.'s decision to file the complaint when it did. you know, there had been wells notices, of

defend goldman. >> all right. i will defend goldman. it's true that i worked there at one point in my career and they gave me my start. i do think they will lose this lawsuit but let's put that aside for a second. goldman sachs created along with aca which is an insurer and paulson something that allowed you to take either side of the trade. no one told you that you had to bet in favor of housing. no one told you you had to bet against it. they were all sophisticated investors. in every case goldman sachs disagrees with a lot of the accusations that have been made, particularly that this basket was put together by paulson. it says it was put together with input from paulson. so if we take that as a given, it is very difficult to see where the sec goes with this case and whether it was split -- the commission voted 3-2 go after goldman, along democratic party lines. >> isn't there a moment in time, i go back to drexel and milken where at some point somebody is playing too much of the house and the correction has to happen? isn't this a m

they have accused goldman sachs of essentially designing... collaborating with a short sell to design securities that would fail. and then deceiving investors about how these securitys were created. and it is a riveting case because although i had heard tell of such things happening inside the big wall street firms until now i didn't know for sure that it had. and so i feel like for the first time a light is being shrined be into places where it needs to be shineeneded and we all all learn a lot about how these places conducted their business. >> rose: you think this is just the begin? >> oh, yes. i'd be really surprised if goldman sachs was the only firm designing securities with the help of short sellers that were made to fail and i'd be surprised if john paulson was the only hedge fund manager working with the firms to do it. and more generally it points to just the degree of corruption in fixed income markets. i mean, we have... the story gets complicated as you dig into it but goldman sachs was... essentially seems to have been using a se

number two, goldman -- i've heard a lot of numbers about what goldman sachs made. my department, which included these guys and other businesses including commercial mortgages, where we made money, the number was $1.1 to $1.2 billion in 2007. that's the revenue number. so that's the number i know, that was roughly 20% to 25% more than the year before. the reason i give you that, i thought the firm managed it well. but that wasn't that atypical a year in that business. i wanted to make sure the numbers that i know -- because i had heard some numbers that i felt like weren't accurate. >> first of all, i -- i do want to thank you all for being here, and i mean that. i also would like you to have go out and have pop and leave the attorneys out of this thing, because i know you have to cover yourselves. the fact is, i think we've got a problem, and i think we've got a problem with what's gone on on wall street, and. a lot of that good information came from you guys. i think you had to temper it, i think it's pretty obvious, but that's okay. that's what you were instructe

s fraud case against goldman sachs is about. it's also a perennial problem for our financial system. it's why we have regulations and disclosure requirements, and it's never going to entirely go away. i'm justin fox. >> that's nightly business report for tuesday, april 27. i'm susie gharib. good night, everyone, and good night to you, too, tom. >> tom: good night susie. we hope to see all of you again tomorrow night. "nightly business report" is made possible by: this program was made possible by contributions to your pbs station from viewers like you. thank you. captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org

goldman sachs, goldman sachs, goldman sachs -- see all of that? >> yes, mr. chairman. now answer my question. the lawyers i believe this shows the counterparty. but that does not mean that goldman sachs wasn't doing that trade with another client. it is very difficult for me to say i am looking at this whether we were short run not. >> assuming that you're going short, let me ask you the question -- should you have told the client when they ask how you're getting comfortable with this? should you have told them you're going short if you work? >you are asked a question -- how do you guys get comfortable with these kinds of mortgages, but this kind of a mortgage broker? >> again, i do not know if -- >> i know that. assuming that you went short and intended to stay short on that deal, should you have been told a customer asking you the direct question, how can you get comfortable with this, it was your intention to go short 50% of the shortsighted and stayed that if that was the fact? that is my question. >> again -- >> answer my . >> i don't understand the question. >> y

goldman is smart.that point we were still in an environment where you could give kudos to having anticipated the housing bubble bursting. but in the benefit of hindsight now, everyone seems to think it was a slam dunk. that goldman nev maman knew it to collapse. they had a conveyor belt of securities to ram down clients' those as they shorted the housing market. that's what you're going to hear today. i wonder if blankfein is in a position to vehemently defend the firm or he's going to take -- as people apologize, we'll do better next time. >> reporter: that's a very interesting question. i was here at beginning of the year for the first hearings of the financial inquiry, the commission on the financial crisis. where blankfein was particularly aggressive and feisty took on the chairman of that committee, strongly in terms of challenging some of thinhis assumptions. i'm curious to see how mr. blankfein chooses to approach today's hearing, if he's the same blankfein, in which he would argue some of the t

of goldman sachs. there is no question about that. >> yes, sir. >> you set the tone. >> yes, sir. >> i have asked a lot of questions about ethics. i have a question for you. why did goldman sachs decide to release the personal e-mails of mr. tourre and not everybody else in this hearing? it had no investigative purpose. we did not expose any of that. we were not exposing it. was that the right decision? is it fair to your employee? is that a political ploy or a defense ploy? why would you do that to one of your own employees? >> you know, i was not closed to the decision -- close to the decision. i was not specific about that. we wanted to get, and i was not thinking about that -- we also provided information from e- mails it respect to the business and there were elements here that spoke badly of the firm and we just wanted to come of breast -- abreast. there was nothing to my understanding about mr. tourre's e-mails that were evidence of the mills that were already out. i did not think we were adding

goldman sachs faces congress. all your favorite characters will be there from fab fab all the way up to lloyd blankfein. but holes already being poked in the s.e.c.'s case. will it be smooth sailing for the financials after tomorrow's three-ring circus? on the fast line right now anthony scaramucci of skybridge capital. anthony, after tomorrow is the coast clear? we're getting some static here. >> i'll tell you i'm not so sure about the coast being clear for goldman. but here is what's going to happen in this slugfest tomorrow, and here's the backdrop. number one, goldman is clearly losing in the court of public opinion. you can see the stock continuing to trade lower. the central thesis being this uncertainty will be a cloud over its stock and other financial services stocks. number two, they have whistleblower rhys many. an angry spouse, somebody in there leaking another bad situation for goldman. and lastly, if they win, it's sort of a pyrrhic victory. look for the s.e.c. to really gear up and continue to look

>>> grilling goldman. goldman sachs executives to testify on capitol hill amid allegations they cheated investors. >>> 1,000 barrels a day leaking oil from that collapsed rig in the gulf of mexico threatens an environmental disaster. >>> and 911, please hold. car jacked college students in atlanta claim emergency services took their time. this is the "cbs morning news" took their time. this is the "cbs morning news" for tuesday, april 27th, 2010. captioning funded by cbs >>> good morning. thanks for joining us. i'm michelle gielan. democrats hope public anger at wall street will help them push through a sweeping financial reform bill. this morning they may get some help when a senate committee questions top executives from goldman sachs. ten days ago the sec accused wall street of fraud. randall pinkston is in washington with details. good morning, randall. >> reporter: good morning. that senate subcommittee is expected to use some of goldman sachs' own e-mails when it questions lloyd blank fine. blankfein

will goldman, a year from now, be the goldman that it was two weeks ago? absolutely not.t will be demon extrably smaller. there will be people leaving the firm, no question. they will be doing less business than they are doing now. will goldman ten years from now be the firm that it was two weeks ago? probably. i think the similarity to what happened between the tobacco companies and what's going to happen to goldman is quite clear. this is going to dral drag on for a long period of time. their leadership is going to have to be focused with lawyers rather than with clients. it's going to have to keep their vision away if doing their business and try to focus on what's going on in the courts. it's going to be one court circumstance after another and it's just going to get to be a very old and laborious movie. >> and i think that the public perception of goldman, i think to a certain extent, isn't the most important thing here. i think it's the relationship with their clients that's key and it's the trust. i think their clients are obviously educated enough to realize what

goldman sachs. goldman sachs, lloyd says we're doing god's work, it was probably a joke.o real response from goldman sachs. after that was quoted in the paper. communication when you're a public enterprise and a publicly nobody enterprise. paulson is a private company, but he's an internationally known figure. and i think he's getting very good advice here to communicate with these people. >> we showed a list of some of paulson's top holdings, some of which have seen some liquidation in the stocks, that is, on fears there are redemptions in paulson funds. but anthony, you actually like one of his holdings. which one? >> yeah. it's time for the hedge fund trade of the week. and this is cit, which is in paulson's portfolio. it's also in avenue's portfolio. and the way these guys got this stock is that they owned the debt in cit and they got this stock and warrants out of the bankruptcy. cit has a brand new management team in john thain. it's trading below book value. and it's a warrant on the middle market lending recovery that we should see as the economy recovers. so this

goldman sachs reported huge first quarter profits. on the other hand, their stock dropped another 2%. michelle cabrera has the details. >>> and later on, should synthetic cdos be banned? we'll talk to david goldman and peter morici. there is a debate. you're watching cnbc, first in business worldwide. >>> all right. fresh off s.e.c. fraud charges, goldman sachs reported huge first quarter earnings today. cnbc's michelle cabrera joins us. hello. >> three and a half billion dollars they made in profits, much better than a year ago. nearly double what they made a year ago. look at the numbers. turned out to be 5.59 per share, much better than expected. there's the chart. what the stock did today. we'll explain why it was down toward the end here. once again, the first thing we wanted to show you were the actual earnings which were much better than expected. revenue came in better than expected. nearly $13 billion in revenue. there you see the actual income. 98% better. there we see revenue. $12.8 billion. a year ago they made only $1.4 b

goldman is a great company. goldman is going to be around for a long period of time. they have been damaged, however, and this is not going away tomorrow. >> there are already some estimates out there. we had brad hintz from sanford bernstein on on friday and he said the worst case scenario is like 1.20 or so, and that's if goldman loses everything, if they're fined a massive fine-f they have to actually cover the $1 billion in losses, everything. and that is still manageable. so is it possible that we still have these cockroaches and they come but it's already factored into the stock? we've seen that time and time again here in the markets. >> the problem is that this is all psychology. yeah, brad is one of the smartest guys. when he's on here, i listen. when i see his name on the sheet, i go and turn the tv on because he's going to give you very, very precise information. but $1.20 is not important when it is the psychology that has changed. the public's going to take umbrage in the fact that goldman sachs is being thrown upon a fire. the public wants to see this ha

it's not even goldman's reputation which presumably in time will recover, but goldman, like other firms, structured tens of billions of securities that added absolutely nothing to the economy. they contributed nothing to real estate. them didn't put a single american in their homes... in new homes. they just allowed people to take bets. when the mortgage bubble collapsed, they greatly aggravated the losses and the damage done. these firms are running what were in fact casinos. they were off-track betting parlors for the american mortgage industry. the question for congress is, which has been posed now for 12 years and have been ignored, will they finally get these derivative instruments under regulation. >> brown: there were many variations on a constant theme theme here. questions like who exactly is goldman serving. who and what are these trades for? what is your responsibility to your client? and on and on. what were they really trying to get at here? >> goldman like many other firms has transformed from investment banning banninging firm to trading to a real trading house with banki

he says we got mugged by goldman sachs. and today congress rips into that firm, accused of ripping you off. >> you knew it was a [ bleep ] deal. >> larry: plus, moore's take on arizona's controversial immigration law and sarah palin, and the american auto industry's comeback. michael moore, his opinions for the hour next, on "larry king live." >> larry: like him or dislike him, he is never dull. we welcome michael moore. >> try to like him if you can, please. >> larry: we welcome michael moore back to "larry king live." the oscar-winning documentary filmmaker, best-selling author, most recent film "capitalism: a love story." kind of prophetic today. we're going to talk about goldman sachs. and i think he is going to take them to task. the firm's executives past and present were on the hot seat on capitol hill hill today. hearings just ended. members of the permanent subcommittee on investigation accused them of unbridled greed in helping push the u.s. economy into a tailspin. the final witness goldman chairman and ceo lloyd

this is goldman sachs' political habits.s i stretch this out which party gets most of the company's money. you see the contributions in the early '90s relatively modest. more than $2 million. the blue is democrats. $1.5 million to the republicans there. the 2002 campaign, the 2004 campaign crossed the $4 million park in contributions. in 2008 in part because of big support of the president we'll show you that way, way up here. so goldman sachs money most of it you get the picture goes to the democrats. let's all look at something else about its annual lobbying spending. it's not just giving money to campaigns but spending a lot on lobbyis lobbyists. way back here in 1998 modest amount below a million dollars. 2003 crossed the million mark. recent years down here especially here as we've had the problems on wall street and the issues here. way up the lobbying money. way up in 2008, up in 2009 and we're in the first quarter just into the second quarter of 2010. we don't have those numbers yet in the middle of this debate. the

>> goldman sachs. >> right, goldman sachs. what were you going to ask? >> i was going to say do you think there is anything inherently wrong or there should be any admission by the companies and a lot of the profits are coming because of the federal government. are you fine with the way the announcements have come? >> look, i -- there should be some admission of that. and before they all pat themselves on the back for the great job they did and get a big bonus based on their profits, somebody ought to recognize a great deal of that profit came from interventions from the government saving their bae the >> let's talk about too big to fail. that's a bone of contention. we had kay bailey hutchison on yesterday talking about it. i was under the impression -- by the way, i am an a-political kind of animal. i was always under the impression that too big to fail was more of an economic condition or situation than a government policy. if you're big enough to cause a problem with the system, then you are, by definition, too big to fail. and don't we need some mec

ver separately is charging, is that goldman peddled mortgage backed investments that goldman themselves was betting against and maybe even engineered them to fail. take a listen to one of these senators. >> you are the bookie. you are the house. you have less oversight and less regulation as you all began this wild, wild west of traunches, waterfalls, equity traunches, residual, warehousing, as you began all that, you had less oversight than a pit boss in las vegas. >> i said i would avoid the jarg jargon. i never said anybody else would. goldman says it didn't mislead anybody. it lost more than a billion dollars on its own investments. ceo lloyd blankfein testifies. he says, we didn't have a massive short against the housing market and we certainly did not bet against our clients. joining me now is democratic member of the investigation subcommittee ted kaufman. thank you for being with us. >> thanks for having me. >> this was the face of wall street. >> right. >> so many people are angry and so many people are looking for someone to blame for making this recession into something worse

goldman and mr. paulson may not have wanted to tell anybody their position, but not everybody is so afraid. we'll have the trades next. >> and a quick reminder, all the recommendations expressed by jim cramer are solely his and not the opinions of cnbc. and may have been previously disseminated by him. before acting on a recommendation, consider its suitability for your circumstances and consider seeking advice from your own financial adviser. geico's been saving people money and who doesn't want value for their dollar? been true since the day i made my first dollar. where is that dollar? i got it out to show you... uhh... was it rather old and wrinkly? yeah, you saw it? umm fancy a crisp? geico. fifteen minutes could save you fifteen percent or more on car insurance. national car rental? that's my choice. because with national, i roll past the counter... and choose any car in the aisle. choosing your own car? now, that's a good call. go national. go like a pro. >>> welcome back to "street signs." wi

in june of the previous year, goldman sachs launched a $3 billion rescue package for cit structured as a 20-year swap. here's what's crucial. according to an s.e.c. filing, cit declared bankruptcy. they would be subject to what's called a make whole amount that would be equal to all the future fees goldman thought they were going to get discounted present value, a total of $1 billion, according to later press reports. those familiar with the deal say it was structured such that goldman sachs was much better off if cit went bankrupt. goldman has always defended that deal, saying they gave the company workable financing when no one else would. the broader issue, of course, that goldman sachs faces, is that every time they have to defend themselves against a new allegation, whether it's this charge by the s.e.c., whether it's the situation with cit, aig, they are having to face down the notion that perhaps they have a corporate culture that puts clients second. guys, know they're keenly aware to this, because their letter to shareholders this year referred to clients 56 times and lloyd

let's replace goldman sachs and these bonds. let's treat goldman sachs as if it were an antique, october car dealer and they're selling '57 chevys. these got these two '57 chevys in the shop on the left and right. they have a few dings. some of the parts are really good, some are not. let's just say that this paulson and company, this hedge fund company we're talking about walks into that dealership and says, i will take this car as long as you take all the bad parts out of it, put it in the other car and take all the good parts out of the other car and put it in this one. so now what happens is you've got one of these two '57 chevys that's got great parts in it. it's all shiny and new. the other one's battered up and it's got bad parts in it. let's move forward. now the dealership, goldman sachs, this is all what's alleged. nothing's been proven. this is what the sec says. the dealership has sold the one shiny new car. the car with all the bad parts, they shine it up. they make it look like the same car, and they sell it as if

candidate obama accepted $990,000 from goldman employees or family members, making goldman the second largest institutional donor to his white house campaign. goldman is pouring money in the mid-term election cycle, $700,000 so far and 70% received by democrats. harry reid received $4,900 from goldman. he refused to answer reporters' questions today as to whether he would give the donation back. of the top ten recipients of the goldman cash so far this election cycle, eight are democrats. >> bret: story that we'll likely hear more of. major, thanks. there are some questions about the timing of the s.e.c. announcement of its action against goldman sachs. fox business network correspondent peter barnes is here with that part of the story. good evening. >> good evening, bret. that's right. there are some lawmakers and financial industry officials raising new questions about the timing of the administration's lawsuit against goldman sachs. as you recall on friday, the securities and exchange commission charged goldman with fraud in the sale of $2 billion in securities. investors lost $1 b

goldman is having none of it. they know that the committee has all these e-mails in their own words. but they're arguing still that they are misunderstood. so i expect a lot of fireworks tomorrow. >> darren, that hearing tomorrow does put goldman in the forefront. and maybe pushes back regulatory reform down a notch or two on the agenda, but what does it do to the shape of regulatory reform if that negotiating continues? >> well, clearly advocates of a tougher stands on wall street are using this-- stance on wall street are using this hearing and what comes ot about goldman as a battering ram to try to get tougher restrictions on wall street on derivatives, the kinds of products that are at issue here, these very complicated products. also they want to make sure that there are limits on conflicts of interest that they argue that are at issue here and that goldman played a role in. >> so what happens next, darren, as we just reported, this key vote failed. so now what happens? >> they're going to keep at it. everyb

goldman-sachs doing that, too. goldman did have an option to settle.hat's what normally happens in these cases. i mean, presumably the calculation in goldman is that it's such a high-profile case, to settle would be dangerous, but what i think is really interesting about this is the extent to which we are at kind of a cultural watershed, and i think people now are starting to ask in the wake of the financial crisis, with this case crystallizing it, what is all of this for? what is the social benefit of these raids? what is the social benefit of this market? >> but chrystia -- >> that means the longer run -- >> what's the social benefit of betting that a team is going to lose a game, or going to the casino? the fact is, john paulson who is the party who allegedly asked goldman to set these up and pick the mortgages that were designed to fail and shorted them -- >> not charged with anything. >> he made the right bets. >> but john paulson can't benefit from cheap debt. john paulson doesn't get bailed out by the government when he fames. that's the differe

they all are mad at goldman sachs.ttacking goldman sachs. they didn't seem to have a good answer for what they did except to say they are not responsible for having made the recession any worse than it was. the goal would have been to establish whether we can put rules in place that would prevent the financial meltdown of 2008 from happening again. i don't know we got anything out of today's hearings that get us any further toward that. >> there is still more to come. the chairman of goldman sachs, he hasn't even started testifying yet. >> he hasn't started. there are three panels. last one was just him. they're on their second panel now. i don't know whether they're going to decide to move on or they're going to wait because that's where we -- that's what we really want to hear what lloyd blankfein has to say. >> stand by for a moment. there is a lot more i want to discuss about this. one senator actually accused goldman sachs of having less oversight than a pit boss in las vegas. but guess whose job it is to oversee wall street? let's brin

paulson made a billion dollars, and the other clients of goldman sachs lost a billion dollars and goldman sachs walked away with $50 billion of fees that were paid to him -- paid to goldman sachs by mr. paulson. now, that is the basis of the f.c.c. complaint filed against goldman sachs for civil fraud. so what is civil fraud you might ask? civil fraud is, it shall be unlawful for any person in the offer or sale of any securities to obtain money or property by means of any untrue statements of a material fact or any omission to state a material fact necessary. so the question is, was it a material fact that they were made up of these mortgage-backed securities, 90% of which were considered no dock mortgages -- mortgages? that mines there was no documentation that the people that got those mortgages could pay for them. there was no documentation of income, no documentation of debt. those were no doc loans and there were history of no doc loans going back. so it was fixed from the very beginning. they were arranged by john paulson, a material fact that was not disclosed to the other buyers.

and this from goldman c.e.o. lloyd blankfein: "we lost money then made more than we lost because of shorts. >> they were self-interested promoters of risky and complicated financial schemes. >> reporter: michigan democrat carl levin is chairman of the subcommittee investigating the role of investment banking in the housing meltdown. he made the goldman emails public. >> they bundled toxic and dubious mortgages into complex financial instruments, sold them to investors, magnifying and spreading risk throughout the financial system. >> reporter: in a statement today, goldman sachs again aserred it lost money in the mortgage market, $1.2 billion in one year. and said the senate subcommittee "cherry-picked just four e-mails from 20 million pages of documents," "making it seem the subcommittee had reached its conclusion even before holding a hearing." on wall street thursday, president obama criticized bankers for what he called reckless practices as he works to head off a republican filibuster of his financial reform

goldman disputes this. goldman says that they lost money on mortgages in '08 and that they were just trying to be neutral on the market. i imagine we'll hear a lot more about that tomorrow. >> suarez: one document released today at 5:00 eastern time was from a goldman trader involved in mortgages and involved in the european exposure who said the company had really damaged its brand over there. >> you're right. there was an email from october '07 written to dan sparks who is the head of mortgage trading at goldman. that email said, you know, a lot of european investors are very upset with us, with goldman about these deals. we really damaged our brand there. the big question for goldman and all of wall street is, how much have they damaged the reputation with clients, with the public? you know, goldman released the ceo. they released his planned testimony also this afternoon. he is really the most conciliatory that i've seen him. he says he knows americans are angry at wall street and he knows that the deal

laws against goldman sachs when they are in goldman sachs' pocket. i find that the height of hypocrisy when they stand and grandstand and act all indignant when they are the ones taking money. i just find that almost disgusting, to say the least. that is what i want to make a comment on. host: massachusetts, charles on the independent line. caller: i have been in the financial industry the last 40 years and i would just like to make a comment. i would like to pull back out that the senate hearings and all so -- also a number of stations that cover it in the media have generally all missed what i think is the most significant about the financial crisis and about its causes, namely that there were all over the world -- the united states and the rest of the world -- huge number of institutions that had very, very large positions and securities that were all related to mortgages and the housing market and the question is, why did all of these institutions really buy all of these things, why were they so interested in holding these securities? and the thi

all eyes on goldman sachs. the investment giant is facing accusations that it bet against the american people and turned a profit on the country's economic collapse. executives will go to the hill today where they're expected to deny investor fraud. rianne carter is live in the newsroom with more on this story. >> good morning. the hearing will get underway at 10:00 this morning on capitol hill. goldman sachs executives are expected to face tough questions. goldman sachs executives could face a grilling on the hill today. >> bemis led the country and were not fair to their customers. >> during the hearing this morning, email dating back to 2007 may be a topic of discussion. those e-mails that show that the bank allegedly positioned itself to make a fortune off the mortgage crisis. the e-mails, the bank says, were cherry pick. >> you can see what goes on beneath goldman sachs and they will have to address that. that is relatively rare. >> it faces charges that it is led declines by selling mortgage investment se

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i don't carry any water for goldman-sachs.e recipients of government welfare which in my view, they voshouldn't have gotn and the constitution doesn't authorize. this is a novel lawsuit with a novel cause of action. whenever you sell something, you have to tell the buyer everything you know about it even when the buyer is a bank as sophisticated as you. there's no such rule right now. >> all right. judge andrew napolitano, we'll be listening to you and "brian & the judge" on the radio in two hours and four minutes. >> we'll find something to disagree about. >> and the judge will be wrong to disagree agreeably. >> coming up, breaking news overnight about that volcano in iceland. there are reports that eruptions are strengthening. we'll be live at j.f.k. airport with the very latest. >> then ponch and the hulk joining up. joining us live in studio next hour. smart...you're staying at this resort for free? how? welcomerewards from hotels.com. see when i accumulate 10 nights, i get one free. and...they let me choose where to use t

why they went after goldman begs the question, if everybody was doing it, why goldman?hink that really dove tails into the political agenda behind all of this. that is is that goldman is the biggest fish out there. they're the ones who have engendered most of the populist vitreol towards wall street. that's why they went after goldman not so coincidentally on the raging debate about wall street. i think there will be more action brought. >> brown: what do you think. >> i think that's absolutely right. it was very widespread. i think goldman and other transactions followed the same pattern, whether it's fraud or not will be seen. but many other institutions were engaged in this. every time you say the people were betting that housing prices would go up, there has to be another end of that bet. they were betting that housing prices would go down. what happened was this is a completely deregulated market. congress deregulated it in december of 2000. nobody was supervising it. nobody knew about it. it was gambling but it couldn't be dealt with as gambling because congress p

he went to goldman sachs and created subprime mortgages. what goldman helped him do was go out and find other side to that. that's what goldman sachs and other investment banks do, find buyers and sellers. what happened and was wrong was that goldman not only disclose to the buyers, but they were working with john paulson. he helped pick what mortgages were going in, but also led the b buyer to believe that he thought the mortgages would go up, not down. that is where the real issue is and where this complaint comes from. it was a billion dollars. a german bank that lost a billion. there was a guy listed,

the accusation against goldman sachs. the bank help a hedge fund billionaire get even richer by ripping off investors? that's next. michael lewis joins us for that. >>> plus, the investigation into the ft. hood shootings heats up. the obama administration being subpoenaed. we'll tell you what information the senate committee is looking for. a road. when i grow up, i'm going to go there. i'm going to work with kids. i want to fix up old houses. [ female announcer ] at aarp we believe you're never done growing. i want to fall in love again. [ female announcer ] together we can discover the best of what's next at aarp.org. >>> keeping them honest tonight on wall street. did a big wall street bank rip people off by selling them toxic securities based on risky mortgages, investments literally designed to fail? designed largely by a guy betting on exactly that. mortgages failing, other investors losing their shirts. we're talking about paulson and goldman sachs. goldman is being sued by federal regulators and is the poster chil

. >> anthony, again, back with your legal cap, the fact that goldman is basically throwing mr. fabrice out to the wolves, isn't this their way of saying okay, we're playing ball and we think this is the best way to get ourselves out of this? >> okay. i say again, i'm not inside goldman, but i think the standard operating procedure is when someone's been fingered by the s.e.c. you give them a paid leave of absence. they're probably not throwing him under the bus as much as you think. it's just they're getting legal advice from their litigation staff. as to how to properly handle this case. subpoena and that's standard operating procedure, to put the guy on the sidelines and give him a paid leave of absence. >> all right, anthony, we're going to leave it there. thank you very much. anthony scaramucci of skybridge capital. let's take a quick check on shares of goldman sachs in the after-hours action to see if they are in fact moving. it's interesting that anthony said he didn't think -- that goldman would be essentially worried still even though the

was goldman that smart? or did they manipulate the market to profit off the housing prices that some senators firmly believe they did that. >> they believe they made a lot of money. i love the way david brooks put it in today's "new york times." he says goldman will have to decide to portray gemss as dumb but decent, or smart and sleazy. that's a big choice. it's going to play out in the senate hearing room. our jon karl will be there. and he joins us with the latest. >> reporter: good morning. this showdown could not come as a more politically important time. it is dominating the news here, just as congress is considering and fighting over the most sweeping regulations for wall street since the great depression. the accusations against goldman sachs are explosive. senator carl levin says the bank made billions, profiting off a financial meltdown it helped cause. and then, misled their clients and the american people about what they did. >> what was unusual about goldman sachs is they bet heavily in 2007 aga