Goldman's Fabrice Tourre Sticks to the Script

For a star witness, Fabrice "the Fabulous Fab" Tourre had more of a supporting role in Tuesday's Senate hearing into Goldman Sachs's (GS) contributions to the subprime mortgage disaster. Yes, Tourre regretted sending some of those damaging and no-doubt personally embarrassing emails, and, yes, unfortunately, he's had to hire his own attorneys.

But mostly Tourre seemed nervously eager to please. For a guy playing at least three sides against the middle -- his employer, the Securities and Exchange Commission and public opinion -- that may not be such a bad way to go. Perhaps Tourre, a 31-year-old who joined Goldman Sachs straight out of Stanford, is as callow as he looks. He didn't appear a villain and in no way played the fool. Still, in the few times Tourre was required to answer questions, he must have done his bosses proud.

Badgered by Sen. Susan Collins (R-Maine) on whether he thought he had a duty to act in the best interest of his clients, Tourre answered like a market-maker. "We have a duty to our clients to show them prices on transaction they ask prices for," he explained unhelpfully, before adding the kicker: "We're not investment advisors."

Not bad for the only Goldman Sachs guy charged by name in the SEC's fraud case against the firm. Tourre is nothing more than a mid-level trader, for crying out loud. He's supposed to be thrown under the bus. That's the Wall Street playbook after all -- and then get quietly to settling.

Of course the SEC has a playbook, too: Pick on one guy in hopes of turning him. In other words, use Tourre to go hunting for bigger game. And there's Tourre, sitting next to his former managers (one of whom is still with the bank that's put Fab on paid leave), testifying before hostile senators, with his boss, CEO Lloyd Blankfein, waiting in the wings.

There was no percentage to straying from the script, and Tourre insisted his conduct was correct and proper. Why say anything else? Today's hearings were only that -- hearings, an exercise in policy and ethics (don't laugh). This wasn't a legal proceeding, even if Tourre's opening remarks put that forefront in everyone's mind.

"I deny -- categorically -- the SEC's allegation," Tourre read from his prepared testimony before the Senate's Permanent Subcommittee on Investigations. "I will defend myself in court against this false claim."

And so from every angle Tourre's answers offered versions of the same Goldman Sachs tune. He denied that the product he created was designed to lose value and that he failed to disclose material information to outside investors in the deal. He denied any conflicts of interest. And he told lawmakers that the banks that lost money on the investment were sophisticated financial institutions, not retail investors.

In other words, the losers on the deal should have known better. "I was an intermediary between highly sophisticated professional investors -- all of which were institutions. None of my clients were individual, retail investors," Tourre said.

And just so there's no mistake: He's the real victim here. "The last week has been challenging for me and my family, as I have been the target of unfounded attacks on my character and motives," Tourre said. "I appreciate the opportunity to appear before the Subcommittee to answer these false charges."

It took the senators five hours to get through that first of three panels Tuesday -- a pace so glacial that housing prices are recovering faster. Whatever Goldman was up to during the last bubble, we won't know anytime soon.