Grovelling Goldman says sorry for documents foul-up

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The Independent Online

Goldman Sachs apologised to the commission investigating the causes of the credit crisis, saying that when it dumped 2.5 billion pages of documents on the commission's staff it was not trying to swamp and obstruct their work.

Gary Cohn, the investment bank's chief operating officer and deputy to the chief executive Lloyd Blankfein, adopted a humble tone yesterday in his testimony to the Financial Crisis Inquiry Commission (FCIC), in the latest attempt to shore up Goldman's reputation.

As well as diffusing the spat with the FCIC, Mr Cohn provided new numbers that he said proved the bank did not "bet against its clients" in the market for mortgage derivatives as the credit crisis unfolded, as has been alleged.

Mr Cohn was appearing before the FCIC after Goldman received a subpoena, the result of angry exchanges between its officers and commission staff. In May, in response to the FCIC's increasingly frustrated requests for specific details of its mortgage derivatives business, Goldman's lawyers produced 5 terabytes of documents. One terabyte is about 500 million pages.

Mr Cohn said: "We apologise for any failure on our part. We have redoubled our efforts to provide the documents and information you want, road maps to those documents and extensive engagement with your staff."

He said Goldman had reviewed all the mortgage securities and derivatives it had created since December 2006, following fraud charges levelled by US regulators earlier this year. It underwrote $47bn (£31bn) of residential mortgage-backed securities and $14.5bn of collateralised debt obligations, and took short positions on the products – which would rise in value if the products fell – of less than 1 per cent of their value.

"During the two years of the financial crisis. Goldman Sachs lost $1.2bn in its residential mortgage-related business," Mr Cohn told the panel. "We did not 'bet against our clients', and the numbers underscore this fact."