New York: Brass-knuckle sales tactics, worthless assets and clueless investors: the vignettes that emerge from hundreds of pages of three-year-old emails from members of Goldman Sachs Group's mortgage securities trading desk would not be out of place in a David Mamet play.
In Glengarry Glen Ross, Mamet depicted the aggressive and desperate sales tactics employed by a group of salesmen to push worthless Florida real estate on unsuspecting buyers. The play helped popularise that age-old mantra of salesmen everywhere: ‘ABC or Always be Closing'.
And while there may be no memorable catchphrase in the Goldman emails released last week by a US Senate panel probing the firm, there is some similarity in tenor and tone of the bank's drive to unload subprime mortgage-linked securities in spring 2007.
New star
And the emails introduce us to a new sales star at Goldman named Cactus Raazi, who wins heaps of praise from his colleagues for moving subprime-backed debt. The picture that emerges from the many emails is one of a Goldman sales force working under the gun to sell securities, as the window on the market for collateralised debt obligations (CDOs) is rapidly closing.
From the collection of emails, it is clear that in the waning days of the US housing bubble, one of the main missions of Goldman's structured products sales force was to find institutional buyers for the last round of CDOs Goldman was bringing to market.
Goldman needed not only to unload some of its inventory of mortgage-backed securities, but take steps to set up short positions against some of those very same securities.
If nothing else, the investigations and allegations now engulfing Goldman's mortgage-backed securities operation have opened a window into a side of the investment firm that is rarely seen in public. Once-private emails are revealing some of the more colourful the firm relies on to sell its more esoteric products.
If there is any champion for the Goldman side of things in the mass of emails, it is Raazi, who is singled out for his selling prowess a number of times.
Most notable is an email sent by Goldman mortgage executive Tom Montag, now with Bank of America, to Goldman Chief Executive Lloyd Blankfein on March 14, 2007, with the subject line "Cactus Delivers." Montag praises Raazi for helping Goldman cover "another $1.2 billion in shorts in mortgages."
The email thread praising Raazi begins with Sparks writing to Montag and telling him "Cactus Raazi did a fantastic job for the desk." Sparks added, "Please recognise Cactus when you get a chance."
With the CDO market long dead, it is not clear what Raazi is selling now for Goldman. He did not return an email seeking comment.
