The SEC's fraud charges against Goldman Sachs may provide President Barack Obama with a golden opportunity to pursue his financial reform agenda, but Goldman execs are dismissing the federal suit as a "sucker punch," a top industry official told POLITICO.
Goldman executives believe they're being "set up as the villain in the administration's political campaign for Wall Street reform," the official said.
In the meantime, Goldman CEO Lloyd Blankfein is trying to reassure the troops, saying that the investment giant will weather the storm by keeping their focus on clients.
In a voice mail message left for employees Sunday, obtained by POLITICO, Blankfein said the following.
"This is Lloyd on Sunday in New York. Following my message to you on Friday, I wanted to update all of you and let you know that we have been taking all appropriate steps to defend the firm and its reputation. ... The extensive media coverage on the SEC's complaint is certainly uncomfortable, but given the anger directed at financial services, not completely surprising. Still, it is important to put the SEC;'s action in context. The core of the SEC's case is the allegation that one employee misled two professional investors by failing to disclose the role of another market participant in a transaction. Importantly, we had assumed risk in the deal and we lost money, just like the other two long investors. I will repeat what you have heard me say many times in the past: Goldman Sachs has never condoned and would never condone inappropriate activity by any of our people.
"On the contrary, we would be the first to condemn it and take immediate and appropriate action. Our responsibility as a financial intermediary requires it and our commitment to integrity and the firm's business principles demand it. ... In the meantime, be assured that our global team, including the Board of Directors and the Management Committee, is working diligently to address the complaint with the facts. To that end, in the next few weeks, Goldman Sachs will have the opportunity to appear before Congress and discuss our role and participation in the mortgage market more broadly. We look forward to discussing our strong record of prudent risk management. As you return to work on Monday morning, I ask that you maintain the level of focus on our clients that is at the heart of Goldman Sachs' success over the past 140 years. We have faced challenges before and our people have always responded through their skills, talent and focus on our clients. We will do that now, and in the process, re-affirm everything that defines Goldman Sachs. Thank you."
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