The Real Deal Miami

Goldman to fight Senate investigation with document leak

June 06, 2011 06:28PM

Goldman Sachs plans to fight back suspicions that it wrongfully profited from the housing crash by releasing documents showcasing its mortgage bets on its website, the Wall Street Journal reported. The Senate subcommittee’s investigation into the firm is fueling speculation that the firm profited from shorting the housing market while many of its clients’ funds were tied to the success of the market. The Senate panel released charts showing that Goldman had as much as $13.9 billion positioned against the market, but the firm claims the subcommittee neglected more than $5 billion of mortgage-backed loans held by the firm at the time. Moreover, the panel showed the firm’s mortgage business generated $1.1 billion of net revenue in 2007 out of an overall net revenue of $11.6 billion. Yet Goldman reported $46 billion in net revenue that year, and alleges that by underestimating its revenue, the subcommittee is severely overstating the impact of mortgage trading on the company’s bottom line. [WSJ]