... Fabrice Tourre was still at the firm when he brought Goldman into disrepute. Here again, we are concerned with Abacus CDOs, which M. Tourre worked to present as more attractive investments than objectivity would suggest. He tried to get Moody's Investors Service to rate component assets more highly, and did not disclose to clients that a hedge fund collaborated with Goldman in selecting the bonds that made up the products, before betting against them as well.
Rough stuff, but financial transactions can usually be spun to lawmakers and the public as complicated processes with utilities unclear to the uninitiated. Tourre made the mistake, however, of composing eminently-excerptible emails
in which he explained what was going on, albeit with a weird sense of humor. The securities in question were "like a little Frankenstein turning against his own inventor", he wrote, "a 'thing', which has no purpose, which is absolutely conceptual and highly theoretical and which nobody knows how to price." Nevertheless, he "managed to sell a few abacus bonds to widow (sic) and orphans that I ran into at the airport". Most revealing of all, Tourre offered the following ironic explanation of why Goldman's double-dealing wasn't so bad:
"Anyway, not feeling too guilty about this, the real purpose of my job is to make capital markets more efficient and ultimately provide the U.S. consumer with more efficient ways to leverage and finance himself, so there is a humble, noble and ethical reason for my job ;) amazing how good I am in convincing myself !!!"
Which literally makes a mockery of the standard defense of investment banking's social value.